C o n en s - ctbcbank.com€¦ · I. Letter to Sharehol ders D e r h a r e o l de s , C T B C a nk...

1

1

C o nt ent s

I . L et t er t o S h a r eh o l der s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 I I . C o m pa ny P r o f il e

A. C o m pa ny O v er v iew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 B . T h e O r g a niz a t io n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

I I I . B u s ines s O v er v iew

A. B u s ines s P er f o r m a nc e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 B . E m pl o y ees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 C . C o r po r a t e S o c ia l R es po ns ib il it y … … … … … … … … . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

I V . D iv idend P o l ic y a nd E a r ning s D is t r ib u t io n

A. D iv idend P o l ic y a nd S t a t u s o f E xec u t io n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 B . T h e I nf l u enc e o f D iv idend Al l o c a t io n T h is T im e t o T h e B u s ines s P er f o r m a nc e a nd

E a r ning s P er S h a r e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25 C . I nf o r m a t io n R el a t ing t o C o m pens a t io n o f E m pl o y ees , D ir ec t o r s , a nd

S u per v is o r s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25

V . I nt er na l C o nt r o l S t a t em ent … … . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

V I . Au dit C o m m it t ee' s R epo r t o f t h e F ina nc ia l S t a t em ent O f t h e L a s t Y ea r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2

V I I . H ea d O f f ic e a nd D o m es t ic B r a nc h es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3

< Appendix 1 > C o ns o l ida t ed F ina nc ia l R epo r t s f o r 20 1 5 < Appendix 2> Annu a l F ina nc ia l R epo r t s f o r 20 1 5

2

2

I. Letter to Sharehol ders D ea r S h a r eh o l der s , C T B C B a nk C o . , L t d. ( h er eina f t er C T B C B a nk ) c o nt inu ed t o del iv er s t r o ng r es u l t s in 20 1 5 in s pit e o f t h e ec o no m ic s l o w do w n in T a iw a n. O u r a c h iev em ent s a nd per f o r m a nc e w er e r ec o g niz ed b y s ev er a l g l o b a l f ina nc ia l pu b l ic a t io ns , i. e. C T B C B a nk w a s na m ed “ B a nk o f t h e Y ea r in T a iw a n” b y T h e B a n k e r f o r t h e eig h t h t im e. O t h er a w a r ds inc l u ded “ B es t D er iv a t iv es H o u s e in T a iw a n” b y T h e A s s e t f o r t h e f if t h t im e, “ B es t F X H o u s e in T a iw a n” b y G l o b a l F i n a n c e f o r t h e 1 2t h t im e, a nd “ B es t T r a de F ina nc e B a nk in T a iw a n” b y G l o b a l T r a d e R e v i e w f o r c o ns ec u t iv e f iv e y ea r s . W e w er e a l s o a w a r ded “ B es t R et a il B a nk in T a iw a n” b y T h e A s i a n B a n k e r f o r t h e 1 0 t h t im e, a nd o u r w ea l t h m a na g em ent w a s na m ed “ B es t P r iv a t e B a nk ing S er v ic es in T a iw a n” b y E u r o m o n e y f o r t h e 1 2t h t im e. I n 20 1 5 , C T B C B a nk r epo r t ed N T $ 9 2. 5 b il l io n o f net r ev enu e, N T $ 3 9 . 8 b il l io n o f pr e- t a x inc o m e, N T $ 3 4 . 2 b il l io n o f a f t er - t a x inc o m e, a nd 1 8 . 3 9 % o f pr e- t a x R O E o n a c o ns o l ida t ed b a s is . C o m pa r ed t o 20 1 4 , net r ev enu e g r ew 1 % , pr e- t a x inc o m e dec l ined 7 % , a nd t h e b u dg et a c h iev ing r a t e b ef o r e t a xes w a s 9 8 % . H o w ev er , t h e r ec u r r ing pr e- t a x inc o m e g r ew 9 % a nd r ec u r r ing pr o f it b u dg et a c h iev ing r a t e b ef o r e t a xes r ea c h ed 1 0 1 % b y exc l u ding o ne- o f f it em s , s u c h a s inc r ea s ed l o a n l o s s a l l o w a nc e r eq u ir ed b y t h e r eg u l a t o r , t h e s a l e o f t h e C T B C b u il ding s , a nd T S B b a r g a in pu r c h a s e g a in. C T B C B a nk h a s b een l ea ding in inno v a t io n in t h e indu s t r y , c o nt inu ing t o pr o v ide inno v a t iv e f ina nc ia l pr o du c t s a nd s er v ic es t o c u s t o m er s . F o r ins t a nc e, o u r dig it iz ed b r a nc h es w er e eq u ipped w it h t h e s t a t e- o f - t h e- a r t t ec h no l o g ies , s pec if ic a l l y a pio neer ing b io m et r ic AT M t h a t u t il iz es f ing er t ip v ein r ec o g nit io n t o r epl a c e t r a dit io na l AT M c a r ds , w ide u s es o f t a b l et a t b r a nc h es t o r edu c e c u s t o m er w a it ing t im e, a nd f a c ia l r ec o g nit io n t ec h no l o g y t o v er if y c u s t o m er s ’ ident it y . I n a ddit io n, C T B C B a nk w a s t h e f ir s t b a nk t o int r o du c e b l u et o o t h D I R E C T P AY f u nc t io n in o u r m o b il e a pp t h a t ena b l ed o u r c r edit c a r d h o l der s t o c o m pl et e t r a ns a c t io ns a t t h e c a s h ier b y s im pl y ent er ing t h e pa s s w o r ds a t t h eir m o b il e dev ic es . W e a l s o t ea m ed u p w it h U nio nP a y I nt er na t io na l a nd pr o v ided t h e f ir s t m o b il e pa y m ent s er v ic e in nig h t m a r k et s . W it h s u c h c o o per a t io n, c u s t o m er s c a n c o nv enient l y pa y w it h t h eir c r edit c a r ds a t t h e t r a dit io na l l y c a s h - b a s ed s t r eet v endo r s . C T B C B a nk a l s o expa nded c r edit c a r d r ew a r d pr o g r a m t o u s e r ew a r d po int s a t s t r eet v endo r s . T o s t r eng t h en o u r m a r k et - l ea ding po s it io ns in e- b a nk ing a nd o v er s ea s c r edit c a r d b u s ines s , C T B C B a nk es t a b l is h ed t w o new div is io ns “ T a i w a n E - b a n k i n g D i v i s i o n ” a nd “ O v e r s e a s B u s i n e s s D e v e l o p m e n t D i v i s i o n ” in ea r l y 20 1 6 . T h e “ T a i w a n E - b a n k i n g D i v i s i o n ” is t o pl a n e- c h a nnel s t r a t eg ies , t o dev el o p new t ec h no l o g ies , t o enh a nc e pl a t f o r m int eg r a t io n, a nd t o f a c il it a t e e- b u s ines s dev el o pm ent . T h e “ O v e r s e a s B u s i n e s s D e v e l o p m e n t D i v i s i o n ” is t o dev el o p o v er s ea s b u s ines s a s w el l a s b r a nding s t r a t eg ies f o r c r edit c a r d a nd pa y m ent s .

3

3

I n t er m s o f r is k m a na g em ent , t h e C T B C B a nk dem o ns t r a t ed s t r o ng a s s et q u a l it y w it h a c o ns o l ida t ed N P L R a t io a nd C o v er a g e R a t io o f 0 . 7 8 % a nd 1 6 8 . 8 % r es pec t iv el y . C T B C B a nk h a s pr u dent m a na g em ent o n a s s et q u a l it y a nd c a pit a l a deq u a c y c o nt r ib u t ing t o a r o b u s t B I S R a t io o f 1 2. 9 8 % . S t a nda r d & P o o r ’ s g a v e t h e B a nk po s it iv e o u t l o o k in l ig h t o f C T B C B a nk ’ s m o der a t e pr o f it a b il it y , s t r o ng c a pit a l iz a t io n, a nd a b il it y t o m a int a in a l ea ding m a r k et po s it io n des pit e t h e ext r em e c o m pet it io n in t h e b a nk ing s ec t o r . Mos t Recent Credit Ratings

Typ e of Rating

Rating Agency Credit Rating

Ou tl ook Ef f ectiv e Date Long- term Short- term

G l o b a l

M o o dy ’ s A2 P r im e- 1 S t a b l e 20 1 6 . 0 4 . 0 6

S t a nda r d & P o o r ’ s A- A- 2 P o s it iv e 20 1 4 . 0 7 . 22

F it c h A F 1 N eg a t iv e 20 1 5 . 0 9 . 25

N a t io na l T a iw a n R a t ing s t w AA+ t w A- 1 + S t a b l e 20 1 4 . 0 7 . 22

F it c h AA+ ( t w n) F 1 + ( t w n) N eg a t iv e 20 1 5 . 0 9 . 25

2015 Market and Banking Industry Review I n 20 1 5 , em er g ing c o u nt r ies h a d s l o w er - t h a n- expec t ed g r o w t h b ec a u s e o f c a pit a l o u t f l o w s a s a r es u l t o f s t r eng t h ened U S D o l l a r c a u s ed b y t h e expec t a t io n o f r a t e h ik es in t h e U nit ed S t a t es a nd pl u ng ing c o m m o dit y pr ic es . C h ina c o nt inu ed t o c o ndu c t s t r u c t u r a l r ef o r m s t h a t a l s o l ed t o s l o w er g r o w t h . T h e E u r o z o ne a nd J a pa n, w it h t h e s u ppo r t o f expa nded q u a nt it a t iv e ea s ing , s h o w ed m o des t r ec o v er y . F o r t u na t el y , t h e U S j o b m a r k et dem o ns t r a t ed s t ea dy im pr o v em ent a nd t h e inc r ea s ed dis po s a b l e inc o m e w a s a b l e t o s u ppo r t t h e do m es t ic c o ns u m pt io n. W h il e t h e g l o b a l ec o no m y c o nt inu ed t h e U S - l ed expa ns io n in 20 1 5 , t h e g r o w t h w a s exc eeding l y s l o w a nd u nev en. C ent r a l B a nk o f t h e R epu b l ic o f C h ina h a d t o r edu c e int er es t r a t es t o s u ppo r t T a iw a n’ s ec o no m y g iv en t h e g l o b a l ec o no m ic s l u g g is h nes s , int er na t io na l f ina nc ia l t u r b u l enc e, r ec o r d- l o w o il pr ic es , a nd s l o w ing ec o no m ic g r o w t h a nd im pl em ent a t io n o f a n im po r t s u b s t it u t io n dev el o pm ent s t r a t eg y in C h ina a f t er r epo r t ing a 4 . 0 4 % o f g r o w t h in t h e f ir s t q u a r t er . D u e t o w ea k er t h a n expec t ed ec o no m ic per f o r m a nc e in T a iw a n a l o ng w it h t h e int ens if ied t u r m o il in t h e int er na t io na l f ina nc ia l m a r k et s , t h e o v er a l l b a nk ing s ec t o r h a s b ec o m e m o r e r is k - c a u t io u s . 2016 Ou tl ook C T B C B a nk w il l c o nc ent r a t e o n a u g m ent ing b u s ines s w it h o u r c o r e c u s t o m er s , enh a nc ing o u r l ea ding po s it io n in o u r c o r e b u s ines s es in T a iw a n, a nd expa nding o u r o v er s ea s f o o t pr int a s o u r f u t u r e g r o w t h dr iv er . C T B C B a nk w il l c o nt inu e t o inv es t in c o m pl ia nc e a nd inf o r m a t io n t ec h no l o g y inf r a s t r u c t u r e t o o pt im iz e c u s t o m er exper ienc e, t o q u ic k l y r es po nd t o c u s t o m er s ’ c h a ng ing b eh a v io r s , t o pr o v ide a dif f er ent ia t ed c u s t o m er exper ienc e, a nd t o im pr o v e o per a t io na l ef f ic ienc y .

4

4

B u s ines s pl a ns a r e dis c u s s ed in det a il b el o w : 1 . E xpa nd o u r c o r e b u s ines s in T a iw a n

C T B C B a nk ' s ins t it u t io na l b a nk ing b u s ines s w il l m a int a in o u r l ea ding po s it io n in t h e indu s t r y b y expa nding T a iw a n c u s t o m er b a s e, s t r eng t h ening c r o s s - s el l ing c a pa b il it y , int eg r a t ing o u r G r ea t er C h ina pl a t f o r m , a nd c a pt u r ing t h e o ppo r t u nit ies o f R M B int er na t io na l iz a t io n, c r o s s - s t r a it f ina nc ia l dev el o pm ent , a nd r el a xa t io n o f r el a t ed r eg u l a t io ns . I n r et a il b a nk ing b u s ines s , C T B C B a nk w il l c o nt inu e t o pr o v ide inno v a t iv e pr o du c t s a nd s er v ic es t o m eet c u s t o m er s ’ needs . T h r o u g h int er c o nnec t ed b r a nc h es a nd dig it a l pl a t f o r m s , w e w il l pr o v ide exq u is ient c o ns u m er exper ienc e a nd s ea m l es s int er a c t io ns t o o u r c u s t o m er s . As f o r t h e pa y m ent b u s ines s , w e w il l f o c u s o n o u r c o r e b u s ines s a nd dig it a l t r a ns f o r m a t io n, s u c h a s dev el o ping new dig it a l c r edit c a r d b u s ines s m o del s , s et t ing u p a dig it a l l if es t y l e pl a t f o r m , dev el o ping new pa y m ent t o o l s , des ig ning f ina nc ia l pr o du c t s a nd s er v ic es f o r e- c o m m er c e b u s ines s , a nd l a u nc h ing t a il o r ed m a r k et ing c a m pa ig ns b y u t il iz ing b ig da t a a na l y t ic s .

2. E xpa nd o u r o v er s ea s f o o t pr int

I n t h e G r ea t er C h ina m a r k et , C T B C B a nk pl a ns t o int eg r a t e o u r b r a nc h es a nd s u b s idia r y t o f o r m o u r pr es enc e in S h enz h en, B eij ing , a nd S h a ng h a i w it h f u l l pr o du c t s a nd s er v ic es o f f er ing . C T B C B a nk a im s t o b e t h e b es t T a iw a nes e b a nk in C h ina b y expa nding o u r l o c a l c u s t o m er b a s e a nd l ev er a g ing o u r c r o s s - b o r der o f f er ing a s dif f er enc ia t io n. I n S o u t h ea s t As ia , o u r f o c u s is t o es t a b l is h a s iz a b l e m id- c a p b u s ines s in m a j o r AE C m a r k et s w it h o u r S ing a po r e b r a nc h a s t h e r eg io na l h u b t o f a c il it a t e c u s t o m er s ’ c r o s s - b o r der c a pit a l a nd t r a de f l o w s . I n N o r t h Am er ic a s , C T B C B a nk w il l c o nt inu e t o g r o w l o c a l c l ient b a s e t h r o u g h t h e a dv a nt a g e o f o u r As ia net w o r k t o pr o v ide c r o s s - b o r der s er v ic es . I n J a pa n, w e w il l no t o nl y g r o w o u r exis t ing nic h e b u s ines s es , im pr o v e a s s et q u a l it y , a nd inc r ea s e o per a t ing ef f ic ienc y b u t a l s o expa nd o u r c o v er a g e t o new c u s t o m er s eg m ent s w it h new l y - dev el o ped o f f er ing s . S pec if ic a l l y , w e w il l f o c u s o n g r o w ing f ina nc ia l a dv is o r y s er v ic es t o r et ir ed indiv idu a l s a nd t h e g ener a t io n o f 3 0 s - 4 0 s , a nd b u il ding c r o s s - b o r der c o m m er c ia l b a nk ing b u s ines s w it h m ediu m - s iz ed c o r po r a t es . W it h a l l a b o v e ef f o r t s , I a m c o nf ident C T B C B a nk w il l c o nt inu e t o g r o w t o w a r d t h e b es t r eg io na l b a nk in As ia .

C h a ir m a n:

5

5

II. Comp any P rof il e

A. Comp any Ov erv iew 1 . D a t e o f E s t a b l is h m ent : M a r c h 1 4 , 1 9 6 6 2. H is t o r y o f t h e B a nk

F o r m er l y k no w n a s C h ina S ec u r it ies I nv es t m ent C o r p. , C T B C B a nk w a s es t a b l is h ed in 1 9 6 6 a nd h a s b een a f f il ia t ed w it h C T B C F ina nc ia l H o l ding C o . , L t d. s inc e M a y 1 7 , 20 0 2. O per a t io ns inc l u de depo s it s , l o a ns , g u a r a nt ees , f o r eig n exc h a ng e, o f f s h o r e b a nk ing u nit s ( O B U ) , t r u s t s , c r edit c a r ds , s ec u r it ies , b o nds , pr o pr iet a r y f u t u r es , der iv a t iv es , f a c t o r ing , s a f e depo s it b o xes , el ec t r o nic b a nk ing s er v ic es , a nd t h e na t io na l l o t t er y . T o m a xim iz e o per a t io na l s c o pe, C T B C B a nk m er g ed w it h G r a nd C o m m er c ia l B a nk in D ec em b er 20 0 3 , a c q u ir ed t h e F eng s h a n C r edit C o o per a t iv e in J u l y 20 0 4 a nd s u c c es s f u l l y b id t o pu r c h a s e E nt er pr is e B a nk o f H u a l ien in M a y 20 0 7 . T o m a k e t h e g r o u p m o r e ef f ec t iv e, C T B C B a nk f o r m a l l y m er g ed w it h t h e C h ina t r u s t B il l s F ina nc e C o r po r a t io n o n Apr il 26 , 20 0 8 . T h e t r a ns f er o f 1 0 0 % o f T h e T o k y o S t a r B a nk L t d. s h a r es w a s c o m pl et ed o n J u ne 5 , 20 1 4 a nd C T B C B a nk o f f ic ia l l y b ec a m e t h e s o l e s h a r eh o l der o f T h e T o k y o S t a r B a nk . I n O c t o b er 20 1 5 , C T B C B a nk , in a f ir s t f o r t h e b a nk ing indu s t r y , r ec eiv ed a ppr o v a l f r o m t h e c o m pet ent a u t h o r it ies t o o per a t e w it h in t h e ins u r a nc e s ec t o r . O n N o v em b er 3 0 , 20 1 5 , C T B C B a nk m er g ed w it h C T B C I ns u r a nc e B r o k er s . W it h C T B C B a nk , t h e s u r v iv ing c o m pa ny , t o c o nt inu e pr o v iding s er v ic es t o C T B C I ns u r a nc e B r o k er s ’ c l ient s . T h r o u g h t h e end o f 20 1 5 , C T B C B a nk h a d a t o t a l o f 5 , 5 0 5 AT M s in T a iw a n. C T B C B a nk b o a s t s N T $ 2. 7 3 t r il l io n in depo s it s a nd N T $ 3 . 5 2 t r il l io n in t o t a l a s s et s — t h e m o s t o f a ny pr iv a t el y - o per a t ed b a nk in T a iw a n.

3 . Aw a r ds Domes tic Aw ards

● R e a d e r ’ s D i g e s t T r u s t ed B r a nd Aw a r ds : G o l d Aw a r ds f o r “ W ea l t h M a na g em ent ” , “ B a nk ing ” , a nd “ C r edit C a r ds ”

● M a n a g e r T o d a y M a g a z i n e M o s t I nf l u ent ia l B r a nds 20 1 5 : F ir s t pl a c e in t h e B a nk ing C a t eg o r y ● C o m m o n W e a l t h M a g a z i n e G o l d M eda l S er v ic e S u r v ey 20 1 5 : F ir s t pl a c e in t h e B a nk ing

C a t eg o r y ● G l o b a l V i e w s M a g a z i n e W ea l t h M a na g em ent F iv e S t a r Aw a r ds : F ir s t pl a c e ● 3 0 M a g a z i n e Y o u ng G ener a t io n B r a nd S u r v ey 20 1 5 : F ir s t pl a c e f o r m o s t o f t en u s ed c r edit

c a r d b r a nd ● B u s i n e s s N e x t M a g a z i n e B u s ines s I nno v a t io n Aw a r ds : J u r y Aw a r d, f ir s t pl a c e f o r B es t

Appl ic a t io n P l a t f o r m Aw a r d, a nd h o no r a b l e m ent io n f o r B es t M edia I nt eg r a t io n ● B u s i n e s s T o d a y W ea l t h M a na g em ent B a nk ing S u r v ey 20 1 5 : F ir s t pl a c e f o r B es t W ea l t h

M a na g em ent B a nk a nd B es t D ig it a l D ev el o pm ent Aw a r d, s ec o nd pl a c e f o r B es t P r o du c t Aw a r d a nd B es t O v er s ea s D ev el o pm ent Aw a r d, a nd t h ir d pl a c e f o r B es t F ina nc ia l C o ns u l t a nt T ea m

● E x c e l l e n c e M a g a z i n e B es t B a nk S u r v ey 20 1 5 : B es t S o c ia l R es po ns ib il it y Aw a r d

6

6

● S po r t s Adm inis t r a t io n, M inis t r y o f E du c a t io n: G o l d M eda l f o r 20 1 5 S po r t s Ac t iv is t s Aw a r d- S po ns o r C a t eg o r y

● T a iw a n M er g er s & Ac q u is it io ns a nd P r iv a t e E q u it y C o u nc il M AP E C T M & A Aw a r ds 20 1 5 : M o s t R epr es ent a t iv e M & A Aw a r d, M o s t C r ea t iv e M & A Aw a r d, B es t C r o s s - S t r a it M & A Aw a r d

● it S M F T a iw a n I T eS Aw a r ds : E xc el l ent T ec h no l o g ic a l S er v ic e M a na g em ent Aw a r d – P r iv a t e S ec t o r

● G l o b a l V i e w s M a g a z i n e S er v ic e I ndu s t r y B r a nd S u r v ey 20 1 5 : S ec o nd pl a c e in t h e F ina nc e I ndu s t r y

● B u s i n e s s T o d a y 8 t h B u s ines s P r o f es s io na l B r a nd S u r v ey : F ir s t pl a c e in t h e B a nk ing C a t eg o r y ● M a n a g e m e n t M a g a z i n e C o ns u m er S a t is f a c t io n B r a nd S u r v ey 20 1 6 : F ir s t pl a c e in t h e B a nk ing

C a t eg o r y ● W e a l t h M a g a z i n e F a v o r it e B r a nds o f t h e E l it e S u r v ey : B es t D o m es t ic B a nk , B es t B a nk ing

S er v ic e, B es t B a nk ing P r o du c t s , B es t O nl ine B a nk , B es t M o b il e B a nk ing International Aw ards

● G l o b a l F i n a n c e B es t in S o c ia l M edia B a nk G l o b a l W inner B es t in S o c ia l M edia B a nk , As ia - P a c if ic B es t C o r po r a t e/ I ns t it u t io na l D ig it a l B a nk s in T a iw a n B es t F o r eig n E xc h a ng e B a nk in T a iw a n B es t T r a de F ina nc e B a nk in T a iw a n B es t T r ea s u r y & C a s h M a na g em ent B a nk in T a iw a n B es t I nv es t m ent B a nk in T a iw a n B es t S u b - C u s t o dia n B a nk in T a iw a n B es t P r iv a t e B a nk in T a iw a n

● T h e B a n k e r B a nk o f t h e Y ea r in T a iw a n 20 1 5

1 7 8 o f T o p 1 0 0 0 W o r l d B a nk s 20 1 5 ● E u r o m o n e y

B es t B a nk in T a iw a n B es t M a na g ed C o m pa ny in B a nk ing a nd F ina nc e B es t P r iv a t e B a nk ing S er v ic es o v er a l l in T a iw a n B es t N et - W o r t h - S pec if ic S er v ic es in T a iw a n B es t As s et M a na g em ent in T a iw a n B es t I nv es t m ent B a nk ing C a pa b il it ies in T a iw a n B es t C o m m er c ia l B a nk ing C a pa b il it ies in T a iw a n B es t R es ea r c h a nd As s et Al l o c a t io n Adv ic e in T a iw a n B es t I nt er na t io na l C l ient s in T a iw a n B es t S u c c es s io n P l a nning Adv ic e a nd T r u s t s in T a iw a n

7

7

● F i n a n c e A s i a B es t B a nk in T a iw a n B es t F X H o u s e in T a iw a n B es t P r iv a t e B a nk in T a iw a n B es t D ea l in T a iw a n

● I D C F i n a n c i a l I n s i g h t s B es t G o v er na nc e, R is k & C o m pl ia nc e in As ia

● R e t a i l B a n k e r I n t e r n a t i o n a l E xc el l enc e in I nt er net B a nk ing in As ia

● C E P I ( C a r ds & E l ec t r o nic P a y m ent I nt er na t io na l ) B es t D ig it a l W a l l et I nit ia t iv e H ig h l y C o m m ended: B es t C r edit C a r d O f f er ing – T a iw a n

● T h e A s i a n B a n k e r B es t R et a il B a nk in T a iw a n T h e S u b - C u s t o dia n B a nk o f t h e Y ea r , T a iw a n B es t T r a de F ina nc e B a nk in T a iw a n B es t C o u nt er pa r t y B a nk in T a iw a n B es t C o r po r a t e P a y m ent s P r o j ec t in T a iw a n B es t W ea l t h M a na g em ent B u s ines s in T a iw a n B es t M o b il e B a nk ing in T a iw a n B es t D a t a a nd Ana l y t ic s pr o j ec t in T a iw a n Ac h iev em ent in O per a t io na l R is k M a na g em ent o f t h e Y ea r in T a iw a n T h e S t r o ng es t B a nk in T a iw a n

● T h e A s s e t B es t T r a de F ina nc e B a nk in T a iw a n B es t R is k M a na g em ent B a nk in T a iw a n B es t D o m es t ic C u s t o dia n B a nk in T a iw a n D er iv a t iv es H o u s e o f t h e Y ea r , T a iw a n B es t F l o w D er iv a t iv es H o u s e, T a iw a n B es t R a t es D er iv a t iv es H o u s e, T a iw a n B es t F X D er iv a t iv es H o u s e, T a iw a n B es t C o m m o dit ies D er iv a t iv es H o u s e, T a iw a n B es t W ea l t h M a na g er , T a iw a n T a iw a n H ig h l y C o m m ended P r iv a t e B a nk B es t L o a n H o u s e in T a iw a n B es t M & A D ea l in T a iw a n B es t L o a n D ea l in T a iw a n B es t S y ndic a t ed L o a n, I ndo nes ia R a nk 3 T o p inv es t m ent h o u s es in As ia n L o c a l C u r r enc y B o nds f o r 20 1 5 , T a iw a n

8

8

● A s i a m o n e y B es t E xec u t iv e f o r T a iw a n – J a m es C h en, C E O C T B C B a nk B es t D o m es t ic P r iv a t e B a nk in T a iw a n O v er a l l B es t P r iv a t e B a nk in T a iw a n- AU M U S $ 1 - 5 m # 1 O v er a l l B es t P r iv a t e B a nk in T a iw a n- AU M U S $ 5 . 0 1 - 25 m # 1 O v er a l l B es t P r iv a t e B a nk in T a iw a n- AU M U S $ > 25 m # 2 B es t L o c a l C u r r enc y C a s h M a na g em ent S er v ic es v o t ed b y F ina nc ia l I ns t it u t io ns

● G l o b a l T r a d e R e v i e w B es t T r a de F ina nc e B a nk in T a iw a n

● A s i a n B a n k i n g & F i n a n c e T a iw a n D o m es t ic F o r eig n E xc h a ng e B a nk o f t h e Y ea r

● B r a nd F ina nc e # 1 1 6 o f T o p 5 0 0 B a nk ing B r a nds

● W o r l d B r a n d i n g F o r u m B r a nd o f t h e Y ea r – B a nk ing c a t eg o r y

4 . G l o b a l O per a t io ns I n 20 1 5 , C T B C B a nk h a s a t o t a l o f 1 4 9 b r a nc h es w it h in T a iw a n a nd 1 0 6 o u t l et s ( r epr es ent a t iv e o f f ic es , b r a nc h es , a nd s u b s idia r ies a nd t h eir b r a nc h es ) l o c a t es in t h e U S , C a na da , J a pa n, I ndia , I ndo nes ia , t h e P h il ippines , T h a il a nd, V iet na m , H o ng K o ng , S ing a po r e, M y a nm a r , M a l a y s ia , Au s t r a l ia , a nd C h ina , w h ic h m a k es C T B C B a nk T a iw a n’ s m o s t int er na t io na l f ina nc ia l ins t it u t io n. L o o k ing a h ea d, C T B C B a nk w il l c o nt inu e t o s t a nd b y it s b r a nd s pir it “ W e a r e f a m il y ” , w h il e w e w o r k t o pr o t ec t a nd b u il d c l ient s ’ w ea l t h . W e w il l a l s o u ph o l d o u r b r a nd v a l u es o f b eing " C a r ing , P r o f es s io na l , a nd T r u s t w o r t h y " a s w e pr o v ide c u s t o m er s w it h a c o m pl et e a r r a y o f c o nv enient f ina nc ia l s er v ic es . C T B C B a nk w il l c o nt inu e t o s t r iv e t o b e T a iw a n C h a m pio n, As ia n L ea der , a nd t h e f ina nc ia l ins t it u t io n m o s t w o r t h y o f c l ient t r u s t .

9

9

B. The Organiz ation 1 . C T B C C h a r t

20 1 6 . 0 2. 0 1

10

1 0

2. D ir ec t o r s , s u per v is o r s , a nd m a j o r m a na g er s ( 1 ) D ir ec t o r s a nd s u per v is o r s

F eb 29 , 20 1 6

Titl e Name Date of

As s ignment Of f ice Term Signif icant Ex p erience Edu cation

C h a ir m a n C h a o - C h in

T u ng

J u ne 20 , 20 1 4 3

D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. C h a ir m a n o f C T B C C a pit a l C o r p. D ir ec t o r o f C T B C L if e I ns u r a nc e C o . , L t d. C h a ir m a n o f C T B C V ent u r e C a pit a l C o . , L t d. C h a ir m a n o f C T B C As s et M a na g em ent C o . , L t d.

M . S . in M a t er ia l S c ienc e, U niv er s it y o f R o c h es t er , U . S . A.

V ic e C h a ir m a n

T h o m a s K . S . C h en

D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. C h a ir m a n o f C T B C I nv es t m ent s C o . , L t d. C h a ir m a n o f C T B C B a nk C o r p. ( U S A)

B a c h el o r o f P u b l ic F ina nc e, N a t io na l C h eng c h i U niv er s it y , T a iw a n

D ir ec t o r

W en- L o ng Y en

C h a ir m a n o f C T B C F ina nc ia l H o l ding C o . , L t d. C h a ir m a n o f K a ina n U niv er s it y

D epa r t m ent O f E c o no m ic s , S o o c h o w U niv er s it y , T a iw a n

D ir ec t o r H . S t ev e

H s ieh

V ic e C h a ir m a n o f C T B C F ina nc ia l H o l ding C o . , L t d. C h a ir m a n o f T a iw a n L o t t er y C o r po r a t io n I ndependent D ir ec t o r L I T E - O N I T C o . , L t d. S ec r et a r y G ener a l , E xec u t iv e Y u a n

P h . D . in B io c h em ic a l N u t r it io n, U niv er s it y o f W is c o ns in, U . S . A.

D ir ec t o r P a u l T . C .

L ia ng

D ir ec t o r o f T a iw a n L if e I ns u r a nc e C o . , L t d. C h a ir m a n o f T L G C a pit a l C o . , L t d. D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. D ir ec t o r o f C T B C L if e I ns u r a nc e C o . , L t d. P r es ident o f P T B a nk C T B C I ndo nes ia

D epa r t m ent o f I nt er na t io na l T r a de, N a t io na l C h eng c h i U niv er s it y , T a iw a n

D ir ec t o r C h u n- T e C h ia ng

C h a ir m a n o f I S T R A C o r po r a t io n D ir ec t o r o f L o ng C h en P a per C o . , L t d. I ndependent D ir ec t o r F eng S h eng T ec h no l o g y C o . , L t d.

B a c h el o r o f C o m m er c e, U niv er s it y o f t h e W it w a t er s r a nd, J o h a nnes b u r g S o u t h Af r ic a

D ir ec t o r Y en- P a o

C h en

D ir ec t o r o f C T B C S ec u r it ies C o . , L t d. D ir ec t o r o f C T B C F ina nc ia l m a na g em ent c o l l eg e D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d.

P h . D . o f M a na g em ent F ina nc e, U niv er s it y o f G eo r g e W a s h ing t o n, U . S . A.

D ir ec t o r K u en- B a o

L ing J u l y

29 , 20 1 5 3

D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. C h a ir m a n o f T a iw a n L if e I ns u r a nc e C o . , L t d. C h a ir m a n o f C T B C L if e I ns u r a nc e C o . , L t d.

P h . D . in I ns u r a nc e, G eo r g ia S t a t e U niv er s it y , U . S . A.

I ndependent D ir ec t o r

C h u ng - Y u W a ng

J u ne 20 , 20 1 4

3

I ndependent D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. I ndependent D ir ec t o r o f C h u ng h w a T el ec o m C o . , L t d. C h a ir m a n o f T o ng L u ng M et a l I ndu s t r y C o . , L t d. C h a ir m a n o f C h ina S t eel C o . , L t d. C h a ir m a n o f K a o h s iu ng R a pid T r a ns it C o r po r a t io n

H o no r a r y P h . D . C h u ng Y u a n C h r is t ia n U niv er s it y , T a iw a n

11

1 1

Titl e Name Date of

As s ignment Of f ice Term

Signif icant Ex p erience Edu cation


W en- C h ih L ee

J u ne 20 , 20 1 4 3

I ndependent D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. P r o f es s o r , N a t io na l K a o h s iu ng U niv er s it y o f Appl ied S c ienc es D epa r t m ent o f W ea l t h a nd T a xa t io n M a na g em ent I ndependent D ir ec t o r o f B a nk o f K a o h s iu ng P r es ident o f N a t io na l K a o h s iu ng U niv er s it y o f Appl ied S c ienc es

P h . D . N a t io na l T a iw a n U niv er s it y G r a du a t e I ns t it u t e o f C o m m er c e, T a iw a n


J ie- H a u n L ee

I ndependent D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. P r o f es s o r , F ina nc e D epa r t m ent , N a t io na l C h eng c h i U niv er s it y N a t io na l C h eng c h i U niv er s it y E M B A E xec u t iv e O f f ic er D ir ec t o r o f C ent r a l D epo s it I ns u r a nc e C o . , L t d.

P h . D . in F ina nc e, L o u is ia na S t a t e U niv er s it y , U . S . A.


Y in- L u n W u

I ndependent D ir ec t o r o f C T B C F ina nc ia l H o l ding C o . , L t d. E xec u t iv e D ir ec t o r & D ir ec t o r o f F ixed I nc o m e a nd C o r po r a t e S a l es , M iz u h o S ec u r it ies As ia L im it ed E xec u t iv e D ir ec t o r , D ir ec t o r o f C o ns t r u c t io n S o l u t io n S er v ic e S a l es f o r F ina nc ia l I ns t it u t io ns , D ir ec t o r o f D er iv a t iv es in As ia E q u it y F u nds , D ir ec t o r o f D er iv a t iv es in G l o b a l E q u it y F u nds in L o ndo n, R a b o b a nk D ir ec t o r , B a r c l a y s B a nk M a na g ing D ir ec t o r & V ic e P r es ident o f D eb t C a pit a l M a r k et , B a nk er s T r u s t N ew Y o r k C o r po r a t io n E xec u t iv e D ir ec t o r , G o l dm a n S a c h s B a nk

M B A, M c G il l U niv er s it y , C a na da

N o t e Al l D ir ec t o r s a nd I ndependent D ir ec t o r s a r e l eg a l r epr es ent a t iv es o f C T B C F ina nc ia l H o l ding C o . , L t d. w h ic h o w ns 1 0 , 5 7 2, 9 27 , 9 0 5 s h a r es o f c o m m o n s t o c k s a nd 1 0 0 ％ o f o w ner s h ip.

12

1 2

3 . S ig nif ic a nt S h a r eh o l der s o f L eg a l E nt it ies & T o p 1 0 s h a r eh o l der s o r s h a r eh o l der s o w ning o v er 1 0 %

Apr . 26 , 20 1 6

I ns t it u t io na l S h a r eh o l der S h a r eh o l der s o f M a j o r I ns t it u t io na l S h a r eh o l der s

C T B C F ina nc ia l H o l ding C o . , L t d.

1 . Y i K a o I nv es t m ent C o . , L t d. ( 2. 8 7 )

2. M eg a I nt er na t io na l C o m m er c ia l B a nk C o . , L t d. Ac t ing a s C u s t o dia n f o r t h e I nv es t m ent Ac c o u nt o f M o r g a n S t a nl ey F o r m o s a H o l ding s ( C a y m a n) L im it ed ( 2. 6 0 )

3 . N a n S h a n L if e I ns u r a nc e C o . , L t d. ( 2. 3 7 )

4 . J ef f r ey L . S . K o o ( 2. 1 4 )

5 . G o v er nm ent o f S ing a po r e—G O S - E F M C ( 1 . 9 4 )

6 . C a t h a y L if e I ns u r a nc e C o . , L t d. ( 1 . 9 0 )

7 . C h a n W ei I nv es t m ent C o . , L t d. ( 1 . 6 1 )

8 . L o ng B o n I nt er na t io na l C o . , L t d. ( 1 . 5 7 )

9 . B a nk o f T a iw a n C o . , L t d. ( 1 . 5 4 )

1 0 . C T B C B a nk T r u s t Ac c o u nt f o r C T B C F ina nc ia l H o l ding E m pl o y ee W el f a r e S a v ing s C o m m it t ee ( 1 . 4 7 )

4 . M a j o r M a na g er s

M a r 0 1 , 20 1 6

Name Titl e Edu cation Signif icant Ex p erience

J a m es C h en P r es ident & C E O , G l o b a l I ns t it u t io na l B a nk ing

M B A, T h e C it y U niv er s it y o f N ew Y o r k , U S A

P r es ident , I ns t it u t io na l B a nk ing G r o u p o f C T B C B a nk C o . , L t d.

Al b er t L ee S enio r E xec u t iv e V ic e P r es ident M a s t er o f C o m pa r a t iv e L a w , U niv er s it y o f I l l ino is , U S A

C h a ir m a n o f T h r ea dneedl e I nv es t m ent s H o ng K o ng

R o g er K a o S enio r E xec u t iv e V ic e P r es ident M a s t er o f S c ienc e in B r o a dc a s t J o u r na l is m , B o s t o n U niv er s it y , U S A E V P o f C T B C B a nk C o . , L t d.

L a r r y H s u S enio r E xec u t iv e V ic e P r es ident B a c h el o r o f B u s ines s Adm inis t r a t io n, N a t io na l T a iw a n U niv er s it y

E V P o f C T B C B a nk C o . , L t d.

J a m es Y . G . C h en S enio r E xec u t iv e V ic e P r es ident M a s t er o f P o l it ic a l E c o no m y , N a nk a i U niv er s it y , N a nk a i U niv er s it y , C h ina P r es ident o f C h a ng H w a B a nk

I C h eng L iu S enio r E xec u t iv e V ic e P r es ident M B A, U niv er s it y o f P enns y l v a nia , U S A

P r es ident o f B a r c l a y s B a nk P L C .

J a c k T . K . C h eng S enio r E xec u t iv e V ic e P r es ident B a c h el o r o f B u s ines s Adm inis t r a t io n, N a t io na l T a iw a n U niv er s it y

E V P o f C T B C B a nk C o . , L t d.

N o o r M ena i E xec u t iv e V ic e P r es ident M B A, U niv er s it y o f R o c h es t er , U S A C E O o f C h a r l es S c h w a b B a nk

W il l ia m C h u E xec u t iv e V ic e P r es ident B a c h el o r o f M a r ine T r a ns po r t a t io n, N a t io na l C h ia o T u ng U niv er s it y

S V P o f C T B C B a nk C o . , L t d.

M ing j o h n L ee E xec u t iv e V ic e P r es ident M B A, N ew Y o r k U niv er s it y , U S A S V P o f C T B C B a nk C o . , L t d.

J a c k C P W a ng E xec u t iv e V ic e P r es ident M B A, T h e U niv er s it y o f W es t er n O nt a r io , C a na da V ic e P r es ident o f C it ib a nk

C l if f S h en E xec u t iv e V ic e P r es ident B a c h el o r o f B u s ines s Adm inis t r a t io n, N a t io na l C h eng k u ng U niv er s it y


13

1 3


E r ic H s in E xec u t iv e V ic e P r es ident E xec u t iv e M S in F ina nc e, T h e C it y U niv er s it y o f N ew Y o r k , U S A S V P o f C T B C B a nk C o . , L t d.

Am y H C L in E xec u t iv e V ic e P r es ident B a c h el o r o f B a nk ing , N a t io na l C h eng c h i U niv er s it y


Aa r o n K ing E xec u t iv e V ic e P r es ident M a s t er o f L a w , G eo r g et o w n U niv er s it y , U S A

P a r t ner , L o t u s I nt er na t io na l L a w O f f ic e, T a ipei

F r a nk S h ih E xec u t iv e V ic e P r es ident M B A, U niv er s it y o f T exa s a t Au s t in, U S A S V P o f C T B C B a nk C o . , L t d.

C C H o ng E xec u t iv e V ic e P r es ident I nt er na t io na l T r a de, C h ih l ee C o l l eg e o f B u s ines s


E v a n C h a ng E xec u t iv e V ic e P r es ident B a c h el o r o f Ac c o u nt ing , T u ng h a i U niv er s it y

V P o f C T B C B a nk C o . , L t d.

Y o ng J in C h en E xec u t iv e V ic e P r es ident E M B A, N a t io na l C h eng c h i U niv er s it y S V P o f C T B C B a nk C o . , L t d.

Al ex C h en E xec u t iv e V ic e P r es ident B a c h el o r o f E c o no m ic s , C h ines e C u l t u r e U niv er s it y


J a s o n C h en E xec u t iv e V ic e P r es ident B a c h el o r o f B u s ines s Adm inis t r a t io n, F eng C h ia U niv er s it y


H y C h en E xec u t iv e V ic e P r es ident M B A, O h io S t a t e U niv er s it y , U S A S V P o f C T B C B a nk C o . , L t d.

F r a nk H u a ng E xec u t iv e V ic e P r es ident M B A, S t a t e U niv er s it y o f N ew Y o r k a t B u f f a l o , U S A

D ir ec t o r & H ea d o f As ia P a c if ic B u s ines s

C . C . H u a ng E xec u t iv e V ic e P r es ident M B A, I ndia na U niv er s it y a t B l o o m ing t o n, U S A E V P o f AB N AM R O B a nk

Am y Y a ng E xec u t iv e V ic e P r es ident E M B A, N a t io na l T a iw a n U niv er s it y S V P o f C T B C B a nk C o . , L t d.

T o ny Y a ng E xec u t iv e V ic e P r es ident M I B A, U nit ed S t a t es I nt er na t io na l U niv er s it y , U S A S V P o f C T B C B a nk C o . , L t d.

O penm ind Y eh E xec u t iv e V ic e P r es ident B a c h el o r o f E c o no m ic s , T u ng h a i U niv er s it y


M a t t h ew L ia w E xec u t iv e V ic e P r es ident M B A, U niv er s it y o f W is c o ns in a t M a dis o n, U S A S V P o f C T B C B a nk C o . , L t d.

J a m es L ia o E xec u t iv e V ic e P r es ident B a c h el o r o f L a w , T u ng h a i U niv er s it y S V P o f C T B C B a nk C o . , L t d.

P et er W ei E xec u t iv e V ic e P r es ident M B A, N a t io na l T a iw a n U niv er s it y S V P o f C T B C B a nk C o . , L t d.

D er ek L o E xec u t iv e V ic e P r es ident M B A, M a do nna U niv er s it y , U S A S V P o f C T B C B a nk C o . , L t d.

F r iedm a n W a ng S enio r V ic e P r es ident M I B A, N a t io na l T a iw a n U niv er s it y V P o f C T B C B a nk C o . , L t d.

V iv ia n H o S enio r V ic e P r es ident E M B A, N a t io na l S u n Y a t - s en U niv er s it y V P o f C T B C B a nk C o . , L t d.

R et inna S u ng S enio r V ic e P r es ident B a c h el o r o f L a w , N a t io na l C h u ng H s ing U niv er s it y


V inc ent L ee S enio r V ic e P r es ident M I B A, N a t io na l T a iw a n U niv er s it y V P o f C T B C B a nk C o . , L t d.

L i J u a n S enio r V ic e P r es ident M B A, S y r a c u s e U niv er s it y , U S A V P o f C T B C B a nk C o . , L t d.

B r ia n C h o u S enio r V ic e P r es ident M a s t er o f P u b l ic Af f a ir s M a na g em ent , N a t io na l S u n Y a t - s en U niv er s it y


Y a l ing C h iu S enio r V ic e P r es ident M B A, M innes o t a - T w in C it ies U niv er s it y , U S A


14

1 4


F r a nk H s u S enio r V ic e P r es ident M a s t er o f I nt er na t io na l B u s ines s , N a t io na l C h eng c h i U niv er s it y V P o f C T B C B a nk C o . , L t d.

M o r r is K a o S enio r V ic e P r es ident B a c h el o r o f Ac c o u nt ing , F u J en C a t h o l ic U niv er s it y


B o s h a n H s u S enio r V ic e P r es ident M B A, I ndia na U niv er s it y B l o o m ing t o n, U S A


R ic h ie C h en S enio r V ic e P r es ident S ec r et a r ia l S c ienc e, T a m s u i I ns t it u t e o f B u s ines s Adm inis t r a t io n V P o f C T B C B a nk C o . , L t d.

C h a r l es C h en S enio r V ic e P r es ident B a c h el o r o f E c o no m ic s , N a t io na l C h u ng H s ing U niv er s it y


Ander s o n C h en S enio r V ic e P r es ident B a c h el o r o f B u s ines s Adm inis t r a t io n, S o o c h o w U niv er s it y V P o f C T B C B a nk C o . , L t d.

J o h n Y a ng S enio r V ic e P r es ident M B A, U niv er s it y o f T exa s a t Ar l ing t o n, U S A


S t ing Y a ng S enio r V ic e P r es ident B a c h el o r o f Ac c o u nt ing , F u J en C a t h o l ic U niv er s it y


M ir a nda L ia w S enio r V ic e P r es ident M a s t er o f S c ienc e in I ndu s t r ia l Adm inis t r a t io n, C a r neg ie M el l o n U niv er s it y , U S A

C h ief O per a t ing O f f ic er & E xec u t iv e D ir ec t o r o f J P M o r g a n C h a s e B a nk , N . A. T a ipei B r a nc h

E r ic T s a i S enio r V ic e P r es ident E M B A, N a t io na l C h eng c h i U niv er s it y


J er r y S h a w S enio r V ic e P r es ident B a c h el o r o f B u s ines s Adm inis t r a t io n, T a m k a ng U niv er s it y


J ef f r ey H s ieh V ic e P r es ident M a s t er o f Ag r ic u l t u r a l E c o no m ic s , N a t io na l T a iw a n U niv er s it y

M a na g er o f C T B C B a nk C o . , L t d.

15

1 5

III. Bu s ines s Ov erv iew A. Bu s ines s P erf ormance

1 . S c o pe o f B u s ines s ( 1 ) I ns t it u t io na l B a nk ing

a . C o m m er c ia l B a nk ing : W e pr o v ide c u s t o m er s c o m pr eh ens iv e, s pec ia l iz ed, a nd c r o s s - b o r der f ina nc ia l s er v ic es , inc l u ding l o a ns , t r a de f ina nc ing , c a s h m a na g em ent , c o r po r a t e t r u s t , pr o xy s er v ic es , a nd o f f s h o r e pr iv a t e b a nk ing s er v ic es , s u c h a s inv es t m ent a nd f ina nc ia l pl a nning .

b . C a pit a l M a r k et s : W e pr o v ide t a il o r ed s o l u t io ns t o m eet c l ient f ina nc ia l needs . T h es e s er v ic es inc l u de s y ndic a t io n l ending , s t r u c t u r ed f ina nc ing , a nd f ina nc ia l a dv is o r y s er v ic es . W e o f f er a w ide- r a ng e o f f o r eig n exc h a ng e a nd der iv a t iv e pr o du c t s t o s a t is f y c l ient h edg ing a nd f ina nc ing needs . W e s pec ia l iz e in s t r u c t u r ed pr o du c t des ig n a nd pr o pr iet a r y t r a ding .

( 2) R et a il B a nk ing a . W ea l t h M a na g em ent :

W e pr o v ide t a r g et c u s t o m er g r o u ps f ina nc ia l pl a nning , a s s et a l l o c a t io n pl a nning a nd a dv is o r y s er v ic es , a s w el l a s a s s is t a nc e a c q u ir ing a v a r iet y o f f ina nc ia l pr o du c t s .

b . S ec u r ed L ending : W e pr o v ide a v a r iet y o f r es ident ia l m o r t g a g e s er v ic es , inc l u ding h o m e m o r t g a g es , r ef ina nc ing , ins t a l l m ent l o a ns , po l ic y - b a s ed l o a ns , a nd f ina nc ia l pl a nning m o r t g a g es , t o indiv idu a l s a nd r epu r c h a s e a g r eem ent s t o t a r g et ed c o r po r a t e c u s t o m er s .

( 3 ) P a y m ent S er v ic es : a . C r edit C a r d a nd P a y m ent S er v ic es : W e pr o v ide is s u ing a nd a c q u ir ing s er v ic es f o r c r edit c a r ds , s t o r ed v a l u e c a r ds , a nd

deb it c a r ds . W e dev el o p pl a t f o r m s f o r dig it a l w a l l et s , t h ir d pa r t y pa y m ent s , b il l pa y m ent s , a nd

c r o s s - b o r der t r a ns a c t io ns . b . U ns ec u r ed L ending :

W e ext end v a r io u s t y pes o f u ns ec u r ed per s o na l l o a ns , inc l u ding u ns ec u r ed t er m l o a ns a nd r ev o l v ing l o a ns .

( 4 ) B u s ines s in J a pa n a . I ns t it u t io na l B a nk ing :

W e pr o v ide c u s t o m er s c o m pr eh ens iv e, s pec ia l iz ed, a nd c r o s s - b o r der f ina nc ia l s er v ic es , inc l u ding l o a ns , t r a de f ina nc ing , a nd c a s h m a na g em ent s er v ic es . W e pr o v ide c u s t o m iz ed s o l u t io ns t o m eet c l ient f ina nc ia l needs . O u r f ina nc ia l s er v ic es inc l u de a w ide r a ng e o f pr o du c t o pt io ns , inc l u ding b il a t er a l a nd s y ndic a t ed l ending , s t r u c t u r ed f ina nc e, f o r eig n exc h a ng e, a nd der iv a t iv e pr o du c t s , t o m eet c l ient b u s ines s needs .

16

1 6

b . R et a il B a nk ing : W e o f f er c u s t o m er s c u r r ent depo s it s , t im e depo s it s , l o a ns , do m es t ic r em it t a nc e, a nd c r o s s - b o r der r em it t a nc e. I n a ddit io n, o u r r et a il b a nk ing a l s o pr o v ides t a r g et c u s t o m er g r o u ps f ina nc ia l pl a nning a nd a dv is o r y s er v ic es , a s w el l a s m u t u a l f u nds a nd ins u r a nc e pr o du c t s .

Rev enu e Break dow n ( N o t e 1 )

U nit : N T $ m il l io n Rev enu e Sou rce Amou nt %

I ns t it u t io na l B a nk ing 29 , 0 6 9 3 1 . 4 4 % R et a il B a nk ing ( N o t e 2) 3 8 , 1 1 7 4 1 . 23 % J a pa n B u s ines s 1 3 , 6 1 2 1 4 . 7 2% O t h er 1 1 , 6 5 2 1 2. 6 0 % T o t a l 9 2, 4 5 0 1 0 0 . 0 0 % N o t e 1 : B a nk c o ns o l ida t ed b a s is N o t e 2: I nc l u des pa y m ent s er v ic e b u s ines s

2. B u s ines s D is c u s s io n ( 1 ) I ns t it u t io na l B a nk ing

C T B C B a nk c o nt inu es t o m a int a in it s l ea d in ins t it u t io na l b a nk ing in T a iw a n’ s b a nk ing indu s t r y . F a c ed w it h t h e c h a l l eng es po s ed b y f ina nc ia l l ib er a l iz a t io n a nd a n inc r ea s ing l y g l o b a l iz ed m a r k et pl a c e, w e a r e b r o a dening o u r r ev enu e s o u r c es o n t h e T a iw a n m a r k et b y o pt im iz ing c o r e b u s ines s a nd g r o w ing em er g ing b u s ines s . F u r t h er m o r e, w e a r e s t r iv ing t o f u l l y u t il iz e o u r g l o b a l net w o r k , a u g m ent ing o v er s ea s m a r k et s , a nd l ink ing c r o s s - b o r der o ppo r t u nit ies t o b o o s t s y ner g y w it h t h e g o a l o f a c c el er a t ing t h e g r o w t h o f o u r int er na t io na l b u s ines s .

W e h a v e o u r t h u m b o n t h e m a r k et pu l s e, w h ic h ena b l es u s t o l ea d t h e f ina nc ia l indu s t r y w it h c r ea t iv e, s pec ia l iz ed f ina nc ia l pr o du c t s . T h is h a s m a de u s a n indis pens a b l e pa r t ner t o o u r c u s t o m er s . E a c h o f o u r m a in pr o du c t s h a s b een b es t o w ed w it h s u c h int er na t io na l a w a r ds a s “ B es t F o r eig n E xc h a ng e B a nk in T a iw a n” , “ B es t D o m es t ic C u s t o dia n B a nk in T a iw a n” , “ B es t T r ea s u r y & C a s h M a na g em ent B a nk in T a iw a n” , “ B es t T r a de F ina nc e B a nk in T a iw a n” , “ B es t R a t e D er iv a t iv es H o u s e” , a nd “ B es t C o m m o dit ies H o u s e” . O u r pr im a r y pr o du c t s a r e expl a ined b el o w : a . C a s h M a na g em ent :

D r iv en b y s t r o ng s a l es a nd q u a l it y pr o du c t s , C T B C B a nk ’ s m a r k et s h a r e o f t o t a l depo s it s h a s c o nt inu ed t o inc r ea s e, r ea c h ing 6 . 1 % in 20 1 5 . T h e g r o w t h o f o u r depo s it v o l u m e l ed t h e m a r k et , es pec ia l l y f o r eig n c u r r enc y depo s it s , w it h a n a nnu a l g r o w t h r a t e o f 25 % a nd a m a r k et s h a r e o f 8 . 5 % . I t w a s r a nk ed nu m b er t w o in T a iw a n in D ec em b er 20 1 5 .

17

1 7

I n T a iw a n, C T B C B a nk no w em pl o y s t h e new eAC H f u nc t io n l a u nc h ed b y T W N C H ( T h e T a iw a n C l ea r ing H o u s e) t o o b t a in o nl ine a u t h o r iz a t io n f r o m pa y er s w it h o u t AT M c a r ds f o r dir ec t deb it t r a ns a c t io ns . O u r c o r po r a t e c l ient s ( pa y ees ) u t il iz e o u r dir ec t deb it e- s o l u t io n t o ena b l e t h eir c u s t o m er s ( pa y er s ) t o u s e c o m pu t er s o r a m o b il e ph o ne a pps t o c o nnec t t o C T B C ’ s int er net b a nk ing s er v ic es t o o b t a in a u t h o r iz a t io n. P a y ees t h en pr o c es s dir ec t deb it t r a ns a c t io ns in r ea l - t im e. T h is inno v a t io n ena b l es o u r c o r po r a t e c l ient s t o c o l l ec t A/ R m o r e ef f ic ient l y .

b . T r a de F ina nc e B u s ines s : I n 20 1 5 , C T B C B a nk m a int a ined it f o c u s o n t h e t r a de f ina nc e b u s ines s des pit e c h a l l eng es f r o m t h e l es s - t h a n- o pt im a l ec o no m ic env ir o nm ent . As a r es u l t , o u r t r a de f ina nc e a s s et s g r ew b y 5 % in 20 1 5 . C T B C ’ s t r a de b u s ines s m a int a ined it s r a nk ing o f nu m b er s ix in T a iw a n a nd w a s r a nk ed nu m b er o ne a m o ng pr iv a t e b a nk s in t er m s o f v o l u m e o f L C is s u a nc e a nd neg o t ia t io n. I n t h e c o m ing y ea r s , C T B C B a nk ’ s t r a de f ina nc e b u s ines s w il l c o nt inu e t o f o c u s o n enh a nc ing it s s er v ic es , o v er s ea s pl a t f o r m s , a nd pr o du c t inno v a t io n. I n t h e a r ea o f f a c t o r ing b u s ines s , C T B C B a nk r eg a ined it s l ea d po s it io n in T a iw a n in Q 1 20 1 5 . I n 20 1 5 , C T B C ’ s f a c t o r ing v o l u m e t u r no v er a c c o u nt ed f o r 22% o f m a r k et s h a r e. T o dif f er ent ia t e o u r pr o du c t s f r o m t h o s e o f c o m pet it o r s , C T B C B a nk c o nt inu es t o f o c u s o n enh a nc ing s er v ic e q u a l it y , E C A s o l u t io ns , a nd o v er s ea s pl a t f o r m dev el o pm ent t o m a int a in it s l ea d po s it io n in t h e f a c t o r ing b u s ines s .

c . C u s t o dy / C o r po r a t e T r u s t B u s ines s : O u r c o r po r a t e t r u s t b u s ines s c o nt inu ed t o g r o w in 20 1 5 . C T B C B a nk a s s et s u nder c u s t o dy ( AU C ) f r o m a l l s eg m ent s r ea c h ed N T $ 1 . 9 2 t r il l io n ( U S $ 6 0 b il l io n) a t t h e end o f 20 1 5 . R ev enu e f r o m o u r c o r po r a t e t r u s t b u s ines s r ea c h ed N T $ 1 b il l io n ( U S $ 3 1 . 3 m il l io n) in 20 1 5 . C T B C c o nt inu ed t o b e r a nk ed nu m b er o ne in t h e t r a ns f er a g ent a nd em pl o y ee b enef it s b u s ines s in t er m s o f a s s et s c a l e.

d. S y ndic a t ed L o a ns : I t s b r o a d c l ient b a s e, inv es t o r penet r a t io n, s t r u c t u r ing c a pa b il it ies , a nd g eo g r a ph ic a l / s ec t o r div er s if ic a t io n ena b l ed C T B C B a nk t o m a int a in it s po s it io n a s t h e t o p l o a n s y ndic a t io n po w er h o u s e o n t h e T a iw a n m a r k et . C T B C B a nk b o a s t s exper t is e in a l l t y pes o f f ina nc ing a c t iv it ies . O u r s t r u c t u r ed f ina nc ing inc l u des L B O / a c q u is it io n f ina nc ing , a s s et - b a s ed f ina nc ing ( e. g . , AR , a v ia t io n, a nd s h ipping ) , s ec u r it iz a t io n, a nd pr o j ec t f ina nc ing . C T B C l ea ds T a iw a n b a nk s in L B O / a c q u is it io n f ina nc ing , a v ia t io n f ina nc ing , s h ipping f ina nc ing , a nd s ec u r it iz a t io n. I n a ddit io n, C T B C B a nk b eg a n expa nding it s s y ndic a t ed l o a n b u s ines s o u t s ide o f it s h o m e m a r k et l o ng a g o , b ec o m ing a s ig nif ic a nt r eg io na l pl a y er m a ny y ea r s b ef o r e it s c o m pet it o r s in T a iw a n. I n 20 1 5 , C T B C B a nk s u c c es s f u l l y c l o s ed h u ndr eds o f dea l s w it h M L A t it l es in c o u nt r ies a c r o s s N o r t h ea s t As ia a nd S o u t h ea s t As ia , a nd in I ndia . W e a l s o r em a in t h e f o r em o s t b a nk in T a iw a n’ s s y ndic a t io n m a r k et w it h inc o m pa r a b l e a g ent b a nk s er v ic es .

18

1 8

e. F ixed I nc o m e U nder w r it ing : C T B C B a nk ’ s b o nd h o u s e o f f er s a n a l t er na t iv e f u nding s o u r c e t o o u r c l ient s . W e a r e dedic a t ed t o dev el o ping inno v a t iv e pr o du c t s a nd c u s t o m iz ed s o l u t io ns t o o u r c l ient s . I n a ddit io n, o u r H o ng K o ng a nd T a iw a n D C M t ea m s w o r k c l o s el y w it h c l ient s , pr o v iding ins t a nt , w o r l dw ide s er v ic es . L o o k ing b a c k a t 20 1 5 , w e enj o y ed g r ea t a c h iev em ent s a nd m a de g ia nt s t eps f o r w a r d. W e int r o du c ed new o v er s ea s is s u er s t o T a iw a n’ s F o r m o s a B o nd M a r k et , no t o nl y b r ing ing v a l u e t o c l ient s , b u t a l s o inc r ea s ing v is ib il it y a nd pr o m o t ing T a iw a n’ s b o nd m a r k et . W e c o m pl et ed o v er s ea s dea l s in 20 1 5 w it h s u c h o r g a niz a t io ns a s M o r g a n S t a nl ey , N o m u r a I nt er na t io na l F u nding P t e L t d, B a nk o f C h ina L im it ed, T a ipei B r a nc h , G o l dm a n S a c h s G r o u p, a nd S u m it o m o M it s u i B a nk ing C o r po r a t io n. I n 20 1 6 , w e w il l c o nt inu e t o expa nd o u r do m es t ic a nd o v er s ea s c u s t o m er b a s e a nd s t r iv e t o b e t h e m o s t a c t iv e T a iw a nes e b a nk in As ia ’ s deb t c a pit a l m a r k et .

f . T r ea s u r y & D er iv a t iv es : C T B C B a nk pr o v ides a w ide r a ng e o f f ina nc ia l pr o du c t s , inc l u ding b o nds , exc h a ng e- t r a ded a nd o v er - t h e- c o u nt er der iv a t iv es , f o r eig n exc h a ng e, a nd m o ney m a r k et ins t r u m ent s , t o m eet t h e inv es t m ent a nd h edg ing needs o f ins t it u t io na l inv es t o r s , s m a l l a nd m ediu m - s iz ed ent er pr is es , m iddl e- m a r k et ent er pr is es , a nd l a r g e c o r po r a t es . W e pr o v ide t a il o r ed f ina nc ia l s o l u t io ns t o o u r c o r po r a t e a nd ins t it u t io na l c l ient s w o r l dw ide. W e a l s o h a v e t h e m o s t es t a b l is h ed dea l ing r o o m s a c r o s s t h e r eg io n a m o ng T a iw a nes e b a nk s . W it h t h e s t r o ng s u ppo r t o f pr o du c t dev el o pm ent , pr ic ing c a pa b il it y , a nd w a r eh o u s ing a ppet it e f r o m t h e h ea d o f f ic e, o u r dea l ing r o o m s in dif f er ent c o u nt r ies c a n a c c es s t h e m o s t pr o du c t s w it h r ea l - t im e pr ic ing a nd pr o c es s ing pl a t f o r m . C T B C B a nk m a int a ined it s po s it io n a s a l ea ding inv es t m ent b a nk a nd per f o r m ed w el l in t h e r epo r t ing y ea r . I n r es po ns e t o t h e c h a ng ing m a r k et a nd r eg u l a t o r y env ir o nm ent , C T B C B a nk c o nt inu ed t o s t r eng t h en it s r is k m a na g em ent o f exo t ic der iv a t iv es , w h il e enh a nc ing it s a b il it y t o o f f er u niq u e s o l u t io ns t o o u r c l ient s . U s ing a s el f - dev el o ped pr ic ing eng ine m o del , C T B C B a nk pr o v ided m o r e ef f ic ient a nd c o m pl ex pr ic ing f l exib il it y . O u r exper t is e in s t r u c t u r ing exo t ic pr o du c t s a nd o f f er ing r is k m a na g em ent s o l u t io ns in r es po ns e t o c h a ng ing m a r k et c o ndit io ns a nd r eg u l a t o r y env ir o nm ent s et s u s a pa r t f r o m l o c a l c o m pet it o r s . O u r a b il it y t o a dj u s t h a s b een c r it ic a l in o u r o nc e a g a in b eing r a nk ed f ir s t in t h e der iv a t iv es m a r k et s h a r e in t er m s o f t r a de v o l u m e a m o ng T a iw a nes e b a nk s .

19

1 9

( 2) R et a il B a nk ing C T B C B a nk r em a ins t h e pio neer in r et a il b a nk ing pr o du c t inno v a t io n, inc l u ding w ea l t h m a na g em ent a nd m o r t g a g e s er v ic es . C T B C B a nk b o a s t s a h u g e m a r k et s h a r e a nd w a s g iv en 1 4 7 l o c a l a nd int er na t io na l a w a r ds in 20 1 5 , inc l u ding " B es t P r iv a t e B a nk in T a iw a n" f r o m E u r o m o n e y f o r t h e 1 1 t h c o ns ec u t iv e y ea r a nd " B es t R et a il B a nk in T a iw a n" f r o m T h e A s i a n B a n k e r f o r t h e 9 t h y ea r in a r o w . a . W ea l t h M a na g em ent :

I n 20 1 5 , C T B C B a nk em pl o y ed nu m er o u s c u s t o m er ins ig h t s u r v ey s , f o c u s g r o u p dis c u s s io ns , a nd pil o t t es t s t o c o nt inu e im pr o v ing it s pr o du c t s a nd s er v ic es t o m eet c u s t o m er needs . B o t h nu m b er o f W M c u s t o m er s a nd AU M h a v e g r o w n r a pidl y o v er t h e pa s t f ew y ea r s , w it h 6 % a nd 1 0 % g r o w t h , r es pec t iv el y , o v er 20 1 4 . C T B C B a nk ’ s o pen pl a t f o r m s t r a t eg y ena b l es it t o pr o v ide c o m pr eh ens iv e a nd inno v a t iv e W M pr o du c t s t o m eet c u s t o m er s ’ div er s if ied needs . T h e t w o m a j o r W M pr o du c t l ines – m u t u a l f u nds a nd b a nc a s s u r a nc e, h a v e s h o w n r o b u s t g r o w t h , pl a c ing C T B C o n t o p o f t h e m a r k et s h a r e f a r a h ea d o f c o m pet it o r s .

b . M o r t g a g es : As t h e b ig g es t no n- g o v er nm ent - a f f il ia t ed m o r t g a g e pr o v ider , C T B C B a nk is a l s o a m a r k et l ea der , r a nk ed nu m b er f o u r in t h e m o r t g a g e m a r k et . I n s pit e o f do w nt r ends in t h e l o c a l h o u s ing m a r k et , r eg u l a t o r y c o ns t r a int s , a nd int er na l c o m pl ia nc e in 20 1 5 , C T B C B a nk c o nt inu ed t o im pr o v e a s s et q u a l it y t o inc r ea s e pr o f it a b il it y w it h c u s t o m er - o r ient ed l ending s t r a t eg ies . T h es e s t r a t eg ies inc l u ded des ig ning t o t a l f ina nc ing s o l u t io ns w it h v ir t u a l a nd ef f ic ient c u s t o m er s er v ic es .

c . I nt er net B a nk ing : C T B C B a nk pr o v ides a w ide r a ng e o f int er a c t iv e b a nk ing s er v ic es o n t h e int er net . I n 20 1 5 , t h e nu m b er o f C T B C int er net b a nk ing u s er s exc eeded 2. 8 m il l io n. B a c k ed b y it s a w a r d- w inning a nd ev er - im pr o v ing s er v ic e pl a t f o r m , C T B C B a nk ’ s int er net b a nk ing c o nt inu ed t o b e t h e m o s t po pu l a r o n t h e m a r k et w it h m o r e t h a n f o u r m il l io n v is it s per m o nt h .

d. AT M S er v ic es : W it h 5 , 5 0 5 , C T B C B a nk h a s t h e h ig h es t nu m b er o f AT M s a nd w it h 3 2% o f t h e m a r k et , t h e h ig h es t v o l u m e o f int er b a nk w it h dr a w a l t r a ns a c t io ns . I n a ddit io n t o t h e u nc o nv ent io na l s er v ic es C T B C AT M s pr o v ide, s u c h a s int er net b a nk ing a ppl ic a t io ns , C T B C B a nk h a s b een s u b s t it u t ing t r a dit io na l AT M s w it h M u l t i- f u nc t io na l R ec y c l e AT M s t o pr o v ide a n ev en w ider r a ng e o f s er v ic es t o c u s t o m er s , inc l u ding c a s h depo s it s a nd f u nd t r a ns f er s f o r no n- C T B C a c c o u nt - h o l der s .

e. M o b il e B a nk ing : C T B C B a nk enj o y s t h e h ig h es t m a r k et s h a r e in m o b il e b a nk ing . I t h a s 0 . 9 m il l io n m o b il e b a nk ing u s er s a nd h a s s een m o r e t h a n o ne m il l io n AP P do w nl o a ds , t h e h ig h es t in t h e f ina nc ia l c a t eg o r y o n T a iw a n' s AP P S t o r e. C T B C B a nk w a s t h e f ir s t in t h e

20

20

indu s t r y t o l a u nc h iP h o ne T o u c h I D f ing er pr int r ec o g nit io n, m a k ing AP P t r a ns a c t io ns ev en m o r e c o nv enient f o r c u s t o m er s .

( 3 ) C a r ds a nd P a y m ent B a nk ing C T B C c a r ds a nd pa y m ent b u s ines s m a int a ined s u s t a ina b l e po r t f o l io a nd pr o f it a b il it y in 20 1 5 . C T B C B a nk w a s : N o . 1 in c r edit c a r d is s u ing r ev enu e w it h m o r e t h a n N T $ 6 . 5 b il l io n ( 1 4 . 2% o f m a r k et

s h a r e) N o . 1 in c a r d c ir c u l a t io n w it h m o r e t h a n 5 . 8 m il l io n c a r ds ( 1 5 . 2% o f m a r k et s h a r e) N o . 2 in s pending v o l u m e w it h m o r e t h a n N T $ 3 3 3 . 9 b il l io n ( 1 5 % o f m a r k et s h a r e) N o . 1 in r ev o l v ing o u t s t a nding ( inc l u ding u nb il l ed ins t a l l m ent b a l a nc e) w it h m o r e t h a n

N T $ 27 . 8 b il l io n ( 1 4 . 3 % o f m a r k et s h a r e) N o . 1 in c r edit c a r d c a s h a dv a nc e a m o u nt s w it h m o r e t h a n N T $ 8 . 5 b il l io n ( 3 1 . 1 % o f

m a r k et s h a r e) N o . 1 in u ns ec u r ed l ending ending b a l a nc e w it h N T $ 9 6 b il l io n ( 1 0 . 9 % o f m a r k et

s h a r e)

Aw a r ds B es t D ig it a l W a l l et I nit ia t iv e o f 20 1 5 , C E P I ( C a r d a nd E l ec t r o nic P a y m ent

I nt er na t io na l ) As ia Aw a r ds f o r C T B C C a r d App B es t C r edit C a r d O f f er ing - T a iw a n o f 20 1 5 , C E P I As ia Aw a r ds f o r D u a l - C u r r enc y C a r d C T B C B a nk w il l c o nt inu e t o deepen r el a t io ns h ips w it h c o - b r a nded pa r t ner s a nd pr o v ide m er c h a nt s w it h a n int eg r a t ed c a s h f l o w a nd m a r k et ing pl a t f o r m . M o s t im po r t a nt l y , C T B C B a nk w il l s t r iv e t o int eg r a t e t r a dit io na l c r edit c a r ds , m o b il e a pps , dig it a l w a l l et s , a nd it s b il l pa y m ent a nd l ending pl a t f o r m t o pr o v ide c u s t o m er s a c o m pl et e dig it a l exper ienc e.

a . C r edit C a r ds :

I n 20 1 5 , C T B C B a nk m a int a ined it s l ea d in t h e c r edit c a r d m a r k et a nd a nd f o c u s ed o n expa nding it s po r t f o l io in dis t inc t s eg m ent s w it h s pec if ic new pr o du c t s . T h is inc l u ded t h e C o o l O ne C a r d f o r dig it a l na t iv es , t h e X u e X u e C a r d f o r a r t a nd c u l t u r e ent h u s ia s t s , a nd t h e C T B C E l it e C a r d f o r o u r m o s t pr es t ig io u s c l ient s . C T B C B a nk is a l s o t h e f ir s t is s u ing b a nk a ppr o v ed b y r eg u l a t o r s t o is s u e D u a l C u r r enc y C r edit C a r ds ( in N T D a nd U S D , J P Y ) t h a t o f f er c a r dh o l der s t h e o pt io n o f pa y ing f o r pu r c h a s es dir ec t l y f r o m t h eir f o r eig n c u r r enc y a c c o u nt o r in N T D a t t h e c u r r ent exc h a ng e r a t e t o m eet t h e needs o f f r eq u ent f l y er s w h en a b r o a d. I n s epa r a t e c o l l a b o r a t io ns w it h L u na P l a z a a nd G l o b a l M a l l , C T B C pr o v ides u niq u e depa r t m ent s t o r e s h o pping b enef it s f o r c u s t o m er s in l o c a l r eg io ns , enh a nc ing depa r t m ent s t o r e pr iv il eg es t h r o u g h o u t t h e c o u nt r y .

21

21

b . E m er g ing P a y m ent s : W it h t h e f u l l y - u pg r a ded C T B C C a r d a pp, C T B C int r o du c ed o nl ine a ppl ic a t io n pr o c es s es f o r exis t ing c u s t o m er s . T h e a pp a l s o int eg r a t es s u c h f u nc t io ns a s dig it a l pa y m ent s , m er c h a nt pr o m o t io ns , O 2O r ew a r d r edem pt io ns , a nd b il l pa y m ent s in o ne m o b il e a pp. C T B C D I R E C T P AY , a u niq u e m o b il e pa y m ent s o l u t io n a nd a f ir s t in T a iw a n, is em b edded w it h in t h e a pp. I t is a c o nv enient a nd s a f e pa y m ent s o l u t io n u s ed b y f o u r m il l io n C T B C c a r dh o l der s t h a t a l l o w s t h em t o m a k e pu r c h a s es in v a r io u s O 2O pa y m ent s it u a t io ns . Al s o em b edded in t h e a pp is a n inno v a t iv e B ea c o n m ic r o - po s it io ning f u nc t io n, w h ic h o f f er s pr ec is io n pu s h m es s a g es b a s ed o n l o c a t io n.

c . P l a t f o r m a nd S er v ic es : I n a ddit io n, C T B C B a nk c o l l a b o r a t ed w it h t h e P ing An I ns u r a nc e ( G r o u p) C o m pa ny o f C h ina , E Z T AB L E , U U P O N , e7 . N E T , O P E N P O I N T , a nd P o nt a t o enh a nc e t h e ef f ic ienc y o f it s c r edit c a r d r ew a r d po int s in dif f er ent s h o pping v enu es a nd h a s expa nded it s o nl ine- t o - o f f l ine r edem pt io ns t o v endo r s in o u r f a m o u s nig h t m a r k et s . M o r eo v er , t h e im pr o v ed o nl ine c u s t o m er s er v ic e inc l u des new l y a dded s o c ia l m edia c h a nnel s l ik e F a c eb o o k , L ine, a nd W eb C h a t f o r u b iq u it o u s c u s t o m er s er v ic e. C T B C B a nk a l s o l ea ds t h e m a r k et b y pr o v iding a c q u ir ing s er v ic es f o r s m a r t m o b il e dev ic es t o ins u r a nc e, t a xi s er v ic e, a nd del iv er y b u s ines s es .

d. U ns ec u r ed L ending : I n s t ep w it h dig it a l b a nk ing dev el o pm ent s , C T B C B a nk l a u nc h ed it s C T B C L o a n a ppl ic a t io n a nd a u t o m a t ic inf o r m a t io n- pr o c es s ing pl a t f o r m . C u s t o m er s c a n a l s o u s e s m a r t ph o nes , t a b l et s , o r P C s t o a c c es s t h e pl a t f o r m w h ic h pr o v ides s im pl e a nd ef f ic ient o nl ine l o a n s er v ic es c o v er ing t h e f o l l o w ing : l o a n c o ns u l t a nc y w h ic h o f f er s per s o na l iz ed l o a n a r r a ng em ent , a s peedy l o a n pr o c es s w it h l o a ns pr o v ided in a s f a s t a s f o u r h o u r s , a nd l o a n dis b u r s em ent s t h a t a l l o w c u s t o m er s t o s im pl y c l ic k t o o b t a in a l o a n, r a t h er

t h a n v is it ing o ne o f o u r b r a nc h es . F u r t h er m o r e, pr o v iding c u s t o m er s m o r e v a l u a b l e l ending c o nt ent a nd dif f er ent ia l m a r k et ing c a m pa ig ns t h r o u g h dig it a l a nd s o c ia l m edia c h a nnel s h a s b een t h e k ey dr iv er o f a nnu a l g r o w t h o f s a l es v o l u m e.

( 4 ) B u s ines s in J a pa n

C T B C B a nk h a s u nder t a k en t h e r es po ns ib il it y t o s u per v is e a nd m a na g e t w o o per a t io ns in J a pa n, na m el y , a t it s T o k y o S t a r B a nk ( T S B ) s u b s idia r y a nd it s T o k y o B r a nc h . T S B pr o v ides pr o m inent f ina nc ia l s er v ic es t o o u r c u s t o m er s in t h e ins t it u t io na l b a nk ing a nd r et a il b a nk ing f iel ds t h r o u g h o u t it s 3 2 b r a nc h es l o c a t ed in G r ea t er T o k y o . T h e T o k y o b r a nc h , w it h it s h ea dq u a r t er s l o c a t ed in R o ppo ng i, pr o v ides a f u l l r a ng e o f f ina nc ia l s er v ic es t o m eet t h e b u s ines s a nd f ina nc ia l needs o f T a iw a nes e r et a il a nd c o r po r a t e c u s t o m er s .

22

22

a . I ns t it u t io na l B a nk ing : O u r m a in o per a t io n b a s es , l o c a t ed in T o k y o a nd O s a k a , enj o y ed s t ea dy b u s ines s g r o w t h . B y t h e end o f 20 1 5 , l o a n b a l a nc e g r o w t h s t o o d a t 1 5 % o v er t h e pr ev io u s y ea r . W e c o nt inu ed t o enh a nc e t h e s c o pe o f pr o du c t s a nd s er v ic es t o m eet c u s t o m er needs , inc l u ding : f ina nc ia l s er v ic es t o m eet c u s t o m er s ’ c r o s s - b o r der b u s ines s needs I n r ec ent y ea r s , J a pa nes e ent er pr is es c o nt inu ed t o expa nd t h eir o per a t io ns o v er s ea s . T o k eep u p w it h t h is t r end, C T B C pr o v ided a v a r iet y o f c r o s s - b o r der f ina nc ia l s er v ic es , s u c h a s expo r t c r edit ins u r a nc e, o v er s ea s s t r u c t u r ed l ending , a nd s y ndic a t ed l o a ns , t o m eet c l ient s ’ o v er s ea s o per a t io na l needs .

b . R et a il B a nk ing : W it h s t a b l e depo s it inf l o w s f r o m 3 2 b r a nc h es in m a j o r c it ies in J a pa n, T S B w a s a b l e t o ea s il y c a pt u r e b u s ines s o ppo r t u nit ies f o r w ea l t h m a na g em ent o n l o c a l m a r k et s . T o t a l depo s it b a l a nc e a c c o u nt ed f o r J P Y 2 t r il l io n a s o f D ec em b er 20 1 5 . T o h el p c u s t o m er s pu r s u e t h eir g o a l o f “ f ina nc ia l f r eedo m ” , T S B pr o v ides a f f l u ent f ina nc ia l s er v ic es w it h new o f f er ing s l a u nc h ed in 20 1 5 , s u c h a s : R ev er s e m o r t g a g e “ J J ”

T S B s t a r t ed a b u s ines s a l l ia nc e w it h t h e l a r g es t c o m pr eh ens iv e h o u s ing a nd l iv ing env ir o nm ent s o l u t io ns pr o v ider in J a pa n t o a c q u ir e po t ent ia l c u s t o m er s b y pr o v iding a n a dv a nc ed t y pe o f r ev er s e m o r t g a g e c a l l ed “ J J ” in M a r c h 20 1 5 .

I m pl em ent ing t h e u s e o f t a b l et s eq u ipped w it h a f ina nc ia l a dv is o r y s er v ic es a ppl ic a t io n

B. Emp l oyees

Y EAR 2015.12.31 2014.12.31 N u m b er o f E m pl o y ees 1 0 , 7 0 8 1 0 , 24 8

Av er a g e Ag e ( Y ea r s O l d) 3 7 . 8 3 7 . 4 1

Av er a g e T enu r e o f E m pl o y m ent ( Y ea r s ) 9 . 2 8 . 9 9

E du c a t io n E m pl o y ee C o u nt P er c ent a g e E m pl o y ee C o u nt P er c ent a g e

G r a du a t e S c h o o l o r H ig h er 2, 3 26 21 . 7 2% 2, 1 4 9 20 . 9 7 %

U niv er s it y a nd C o l l eg e 7 , 4 4 1 6 9 . 4 9 % 7 , 221 7 0 . 4 6 %

S enio r H ig h S c h o o l 8 8 1 8 . 23 % 8 0 1 7 . 8 2%

B el o w S enio r H ig h S c h o o l 6 0 0 . 5 6 % 7 7 0 . 7 5 %

23

23

C. Corp orate Social Res p ons ibil ity C o r po r a t e S o c ia l R es po ns ib il it y ( C S R ) is a n im po r t a nt pa r t o f C T B C ' s o per a t io ns s t r a t eg y . H u m a n a nd ph y s ic a l r es o u r c es a r e a l l o c a t ed f o r “ c o r po r a t e g o v er na nc e, c l ient r el a t io ns , em pl o y ee c a r e, env ir o nm ent a l pr o t ec t io n, a nd s o c ia l pa r t ic ipa t io n. ” C T B C h a s is s u ed C S R R epo r t s s inc e 20 0 7 a nd is t h e f ir s t f ina nc ia l ins t it u t io n t o b e v er if ied b y t h e B r it is h S t a nda r ds I ns t it u t io n ( B S I ) . I n 20 1 0 , C T B C w a s t h e f ir s t in T a iw a n t o g a in int er na t io na l a c c r edit a t io n a nd h a s r ec eiv ed c er t if ic a t es f r o m B S I f o r f iv e c o ns ec u t iv e y ea r s .

As a l ea der in t h e f ina nc ia l indu s t r y , C T B C h a s c o m po s ed it s C S R r epo r t s a c c o r ding t o t h e G 4 g u idel ines s et f o r t h b y t h e G l o b a l R epo r t ing I nit ia t iv e ( G R I ) s inc e 20 1 3 . T h es e r epo r t s m a k e t h e pu b l ic a nd s h a r eh o l der s a w a r e o f C T B C ' s ph il o s o ph ies a nd a c t io ns a nd g r a du a l l y im pr o v e t h e o r g a niz a t io n, m a k ing C T B C a b et t er c o r po r a t e c it iz en. 1 . C o r po r a t e g o v er na nc e

C T B C u nder s t a nds t h a t ev er y o ne h o pes t h a t c o r po r a t e g o v er na nc e w il l b e h el d t o h ig h er s t a nda r ds . T h a t ’ s w h y w e h a v e a s er ies o f m ea s u r es t h a t int er na l iz es c o r po r a t e g o v er na nc e, m a k ing it a pa r t o f o u r c o r po r a t e c u l t u r e— t h e l a r g es t a s s et t o o u r c o m pa ny — a nd pr o v iding a dded pr o t ec t io n f o r a l l pa r t ies . W h er e po s s ib l e, C T B C a im s t o m a int a in it s c o r po r a t e g o v er na nc e a nd o per a t io ns f r a m ew o r k in o r der t o pr ev ent t h e r is k s o f m o ney l a u nder ing o r f ina nc ing t er r o r is m a nd a c h iev e a s u s t a ina b l e per f o r m a nc e.

2. C l ient r el a t io ns

F o l l o w ing t h e dig it iz a t io n o f t h e f ina nc ia l indu s t r y , c u s t o m er s no w h a v e div er s e m et h o ds f o r int er a c t ing w it h C T B C . W e h a v e b een c r ea t ing s u s t a ina b l e c u s t o m er , s o c ia l , a nd s h a r eh o l der v a l u e f o r nea r l y f if t y y ea r s w it h “ c o nc er n f o r dem a nds , ” “ pr o f es s io na l is m f o r inno v a t io n, ” a nd “ h o nes t y f o r t r u s t ” t o b r ing per s o na b l e a nd c o nv enient f ina nc ia l s er v ic es t o a l l c l ient s . W e b el iev e t h a t o u r c u s t o m er s a r e w h a t m a k e C T B C g r ea t . T h a t ' s w h y w e t r ea t c u s t o m er s l ik e o u r f a m il y a nd, t o g et h er , m a k e a nd pr o t ec t t h e dr ea m s f o r a b et t er f u t u r e w it h t h e u l t im a t e g o a l o f m a k ing C T B C t h e l ea ding f ina nc ia l ins t it u t io n in T a iw a n, As ia , a nd t h e w o r l d. F ina nc ia l h o l ding c o m pa nies m u s t em b r a c e f u t u r e t r ends t o pr o v ide c l ient s w it h a dig it a l pl a t f o r m f o r pr o du c t s a nd s er v ic es a nd r em a in c u r r ent w it h m a r k et ing o per a t io ns . I n t h e f u t u r e, C T B C pl a ns t o f u r t h er int eg r a t e t ec h no l o g y int o it s s er v ic es t o im pr o v e c u s t o m er s ' q u a l it y o f l if e, g a in a deeper u nder s t a nding o f c l ient s t h r o u g h m u l t ipl e des ig ns , a nd dev el o p inno v a t iv e m a r k et s a nd pr o du c t s a s a w a y o f g iv ing b a c k t o c l ient s f o r t h eir s u ppo r t . W e o f f er v a r io u s s er v ic es , f r o m m o b il e b a nk ing t o c o r po r a t e l o a ns , in t h e h o pes o f f inding new a r ea s f o r g r o w t h a nd h el ping indu s t r ies expa nd a nd dev el o p w it h new f ina nc ia l pr o du c t s .

24

24

3 . E m pl o y ee c a r e N o t h ing is m o r e im po r t a nt t o o u r em pl o y ees t h a n t h eir w o r k ing env ir o nm ent a nd s a l a r y . C T B C f o u nds it s h u m a n r es o u r c e po l ic ies o n t h es e t w o el em ent s in o r der t o c r ea t e a h a ppy c o m pa ny a nd ef f ec t iv el y t a k e c a r e o f it s em pl o y ees .

4 . E nv ir o nm ent a l pr o t ec t io n B ef o r e t h e P a r is Ag r eem ent in 20 1 5 , C T B C h a d a l r ea dy t a k en t h e init ia t iv e t o r edu c e it s c a r b o n em is s io ns . W it h t h e h el p o f t h e T a iw a n G r een P r o du c t iv it y F o u nda t io n, C T B C b ec a m e c er t if ied t o I S O 5 0 0 0 1 f o r ener g y m a na g em ent in J u l y 20 1 2. I n D ec em b er o f t h e s a m e y ea r , C T B C b ec a m e t h e f ir s t f ina nc ia l ins t it u t io n in T a iw a n t o ea r n S G S T a iw a n c er t if ic a t io n. R es o u r c es w er e c o m pil ed in 20 1 5 in pr epa r a t io n f o r o u r ener g y m a na g em ent pl a n w h ic h a im s t o l o w er o u r el ec t r ic it y u s e b y 6 % ( 7 8 0 , 0 0 0 k W h ) a nd r edu c e C O 2 em is s io ns b y 4 0 7 . 1 6 t o ns ( eq u iv a l ent t o a f f o r es t a t io n o f a n a r ea 1 . 0 5 t im es t h e s iz e o f D a a n P a r k ) o v er t h e next t h r ee y ea r s . O u r ef f o r t s b et w een 20 1 2 a nd 20 1 5 h a v e a l r ea dy s u r pa s s ed o u r o r ig ina l g o a l s o v er t w o - f o l d. F o u nder o f t h e C T B C C h a r it y F o u nda t io n, J ef f r ey L . S . K o o , o nc e s a id, “ T h e v a l u e o f a c o m pa ny is no t in h o w m u c h m o ney it m a k es , b u t in t h e c o nt r ib u t io ns a nd po s it iv e im pa c t it h a s o n s o c iet y . ” I n t h e f u t u r e, C T B C w il l c o nt inu e it s t r a ns it io n int o a pa per l es s f ina nc ia l ins t it u t io n a nd c r ea t e a n ener g y m a na g em ent a w a r ds s y s t em t o c o m m end ener g y ef f ic ient depa r t m ent s in o r der t o c o m pl y w it h I S O 5 0 0 0 1 ener g y m a na g em ent a nd r edu c e el ec t r ic it y b y 6 % in t h r ee y ea r s . W e w il l m o nit o r t h e dev el o pm ent s in t h e g r een indu s t r y a nd pr o v ide c u s t o m er s w it h inno v a t iv e pr o du c t s in t h e h o pes o f u s ing o u r g r een b r a nd t o enc o u r a g e o t h er s t o r edu c e em is s io ns , t h u s t a k ing a no t h er s t ep t o w a r d a s u s t a ina b l e env ir o nm ent .

5 . S o c ia l pa r t ic ipa t io n

As a m a j o r f ir m in T a iw a n, C T B C pa y s c l o s e a t t ent io n t o t h es e t r ends . O u r s o c ia l inv es t m ent s r a ng e f r o m s er v ic e w o r k t o pr o m o t io n o f s u ppo r t f o r c u l t u r a l a r t s , edu c a t io n, a nt i- dr u g pr o g r a m s , a nd s po r t s . W e do m o r e t h a n s im pl y pr o v ide f u nding ; w e per s o na l l y pa r t ic ipa t e a nd c r ea t e ef f ec t iv e pl a ns t o b ec o m e a dr iv ing f o r c e f o r c h a ng e in s o c iet y . C h a ir m a n o f t h e C T B C C h a r it y F o u nda t io n, J ef f r ey J . L . K o o , des c r ib es C T B C ’ s c u l t u r e a s o ne o f c a r ing , s t a t ing t h a t w e need t o f ir s t c a r e f o r o u r s el v es b ef o r e h el ping c u s t o m er s a nd a l l o f T a iw a n. B a nk ing is a f r a nc h is e indu s t r y , s o if t h er e is a s u r pl u s , t h en w e s h o u l d g iv e b a c k t o s o c iet y . C T B C ’ s c o nc er n f o r s o c iet y h a s no t l es s ened o v er t h e pa s t 3 0 y ea r s ; w e h a v e c o ns t a nt l y inv es t ed t im e a nd ef f o r t int o nu m er o u s pr o j ec t s t o s l o w l y c h a ng e s o c iet y f o r t h e b et t er .

25

25

IV . Div idend P ol icy and Earnings Dis tribu tion A. Div idend p ol icy and s tatu s of ex ecu tion

1 . D iv idend po l ic y : As a s u b s idia r y o f t h e C T B C F ina nc ia l H o l ding C o . , L t d. in o r der t o t a k e c a r e o f t h e f u nd r eq u ir em ent s o f t h e pa r ent c o m pa ny , if t h e B a nk m a y r ea c h t h e r ea s o na b l e s t a nda r d o f B I S R a t io , t h e c a s h div idends a nd b o nu s es f o r c o m m o n s h a r es s h a l l b e in pr io r it y a nd s h a l l b e m a int a ined a t a s t a b l e l ev el ev er y y ea r . T h e a b o v e po l ic y , h o w ev er , is t o b e o b s er v ed o nl y in pr inc ipl e. T h e B a nk s h a l l t a k e int o c o ns ider a t io n o f b u s ines s per f o r m a nc e a nd b u dg et ed c a pit a l r eq u ir em ent s a nd m a k e nec es s a r y a dj u s t m ent s in a c t u a l dis t r ib u t io n. D is t r ib u t io n t er m s , t im e, a nd a m o u nt : I f t h er e a r e ea r ning s in t h e f ina nc ia l s t a t em ent , t h e B a nk s h a l l f ir s t s et a s ide f u nds f o r t a xes , b e a dj u s t ed a c c o r ding t o t h e pr inc ipl es o f f ina nc ia l a c c o u nt ing , a nd s et a s ide f u nds f o r l o s s es , if a ny . T h en it s h a l l s et a s ide 3 0 % o f t h e ea r ning s a s s t a t u t o r y s u r pl u s r es er v e a nd t h e B a nk s h a l l a s per a ppl ic a b l e l a w s a nd r eg u l a t io ns s et a s ide o r r ev er s e t h e s pec ia l r es er v e. T h e w a y o f dis t r ib u t ing t h e r em a inder a nd t h e b eg inning r et a ined ea r ning s s h a l l b e pr o po s ed b y t h e B o a r d o f D ir ec t o r s a nd a ppr o v ed b y t h e S h a r eh o l der s ’ M eet ing . B ef o r e t h e s t a t u t o r y s u r pl u s r es er v e r ea c h es t h e a m o u nt o f t h e t o t a l c a pit a l , t h e dis t r ib u t ed c a s h div idends s h a l l no t exc eed 1 5 % o f t h e t o t a l c a pit a l . I f t h e b a nk ’ s s t a t u t o r y s u r pl u s r es er v e h a s r ea c h ed t h e t o t a l c a pit a l o f it em 2 o f N o . 5 0 in t h e b a nk ing l a w f ina nc ia l b u s ines s s t a nda r ds r eg u l a t ed b y t h e a u t h o r it ies a nd h a s pr o po s ed t h e s t a t u t o r y s u r pl u s r es er v e a c c o r ding t o t h e c o m pa ny l a w , it w il l no t b e l im it ed b y t h e s t a t u t o r y s u r pl u s r es er v e a nd t h e h ig h es t c a s h ea r ning dis t r ib u t io n.

2. T h e B o a r d h a s a ppr o v ed t h e ea r ning s a ppr o pr ia t io n pr o po s a l f o r Y ea r 20 1 5 . I t is pr o po s ed t h a t t o t a l N T $ 24 , 0 9 2, 1 0 8 t h o u s a nd f r o m r et a ined ea r ning s o f Y ea r 20 1 5 w il l b e dis t r ib u t ed in s t o c k a c c o r ding t o t h e r ec o r d s h o w n in t h e s h a r eh o l der b o o k o n t h e dis t r ib u t io n r ec o r d da t e ( R ec o r d D a t e) . T h e t o t a l c o m m o n s t o c k div idends a r e N T $ 2. 27 8 6 6 per s h a r e in s t o c k . I n t h e ev ent o f c a pit a l r a is ing o r r edu c t io n, w h ic h a f f ec t s t h e nu m b er o f o u t s t a nding s h a r es o n R ec o r d D a t e, t h e C h a ir m a n s h a l l b e a u t h o r iz ed t o h a ndl e r el ev a nt m a t t er s .

B. The inf l u ence of div idend al l ocation this time to the bu s ines s p erf ormance and

earnings p er s hare: T h er e w a s no a nno u nc ed f ina nc ia l f o r ec a s t f o r t h e b a nk in Y ea r 20 1 6 ; t h er ef o r e no dis c l o s u r e o f s u c h inf o r m a t io n is needed.

C. Inf ormation rel ating to comp ens ation of emp l oyees , directors , and s u p erv is ors : 1 . T h e per c ent a g es o r r a ng es w it h r es pec t t o em pl o y ee, dir ec t o r , a nd s u per v is o r c o m pens a t io n,

a s s et f o r t h in t h e c o m pa ny ' s a r t ic l es o f inc o r po r a t io n: T h e em pl o y ee b o nu s es a l l o c a t io n r a ng e is b et w een 0 . 0 1 % ~ 0 . 0 5 % in 20 1 4 . D u e t o C o m pa ny Ac t w a s a m ended o n 20 1 5 . 5 . 20 t h a t em pl o y ee c o m pens a t io n do no t b el o ng t o ea r ning dis t r ib u t io n, t h e b a nk s pec if ic a l l y s et 0 . 0 5 % o f t h e B a nk ’ s pr et a x inc o m e b ef o r e dedu c t io n o f

26

26

em pl o y ee c o m pens a t io n a t t h e end o f t h e a c c o u nt ing per io d a s em pl o y ee c o m pens a t io n in t h e Ar t ic l es o f I nc o r po r a t io n. H o w ev er , t h e b o a r d o f dir ec t o r s a nd s u per v is o r c o m pens a t io n a r e no t m ent io ned in t h e Ar t ic l es o f I nc o r po r a t io n.

2. T h e b a s is f o r es t im a t ing t h e a m o u nt o f em pl o y ee, dir ec t o r , a nd s u per v is o r c o m pens a t io n, f o r c a l c u l a t ing t h e nu m b er o f s h a r es t o b e dis t r ib u t ed a s em pl o y ee c o m pens a t io n, a nd t h e a c c o u nt ing t r ea t m ent o f t h e dis c r epa nc y , if a ny , b et w een t h e a c t u a l dis t r ib u t ed a m o u nt a nd t h e es t im a t ed f ig u r e, f o r t h e c u r r ent per io d: E s t im a t io n o f t h e f a ir v a l u e o f em pl o y ee b o nu s es in 20 1 4 is r ec o g niz ed a s c u r r ent - per io d expens es b a s ed o n t h e B a nk ’ s net inc o m e a f t er t a x m inu s a n a ppr o pr ia t e r es er v e a t t h e end o f t h e a c c o u nt ing per io d m u l t ipl ied b y t h e m o s t a ppr o pr ia t e es t im a t e s et b y t h e B a nk ’ s a r t ic l es o f inc o r po r a t io n. H o w ev er , if l a t er t h e a c t u a l a l l o c a t io n a m o u nt pu r s u a nt t o a r es o l u t io n o f t h e B a nk ’ s b o a r d o f dir ec t o r s o n b eh a l f o f s h a r eh o l der s is dif f er ent f r o m t h e es t im a t ed nu m b er , t h e dif f er enc e w o u l d b e r ec o g niz ed a s t h e pr o f it o r l o s s o f t h e next y ea r . E s t im a t io n o f t h e f a ir v a l u e o f em pl o y ee c o m pens a t io n in 20 1 5 is r ec o g niz ed a s c u r r ent - per io d expens es b a s ed o n t h e B a nk ’ s pr et a x inc o m e b ef o r e dedu c t io n o f em pl o y ee c o m pens a t io n a t t h e end o f t h e a c c o u nt ing per io d m u l t ipl ied b y t h e per c ent a g e s et b y t h e B a nk ’ s a r t ic l es o f inc o r po r a t io n. H o w ev er , if l a t er t h e a c t u a l a l l o c a t io n a m o u nt pu r s u a nt t o a r es o l u t io n o f t h e B a nk ’ s b o a r d o f dir ec t o r s o n b eh a l f o f s h a r eh o l der s is dif f er ent f r o m t h e es t im a t ed nu m b er , t h e dif f er enc e w o u l d b e r ec o g niz ed a s t h e pr o f it o r l o s s o f t h e next y ea r .

3 . I nf o r m a t io n o n a ny a ppr o v a l b y t h e b o a r d o f dir ec t o r s o f dis t r ib u t io n o f c o m pens a t io n: ( 1 ) T h e a m o u nt o f a ny em pl o y ee c o m pens a t io n dis t r ib u t ed in c a s h o r s t o c k s a nd

c o m pens a t io n f o r dir ec t o r s a nd s u per v is o r s . I f t h er e is a ny dis c r epa nc y b et w een t h a t a m o u nt a nd t h e es t im a t ed f ig u r e f o r t h e f is c a l y ea r t h es e expens es a r e r ec o g niz ed, t h e dis c r epa nc y , it s c a u s e, a nd t h e s t a t u s o f t r ea t m ent s h a l l b e dis c l o s ed. a . C a s h c o m pens a t io n o f em pl o y ee is N T $ 1 8 , 8 8 4 t h o u s a nd. b . T h e dis c r epa nc y : Ac c r u ed expens e o f em pl o y ee c o m pens a t io n is N T $ 1 9 , 1 25 t h o u s a nd.

T h e dis c r epa nc y b et w een t h e a c t u a l a l l o c a t io n a m o u nt a nd a c c r u ed expens e f o r em pl o y ee c o m pens a t io n is N T $ 24 1 t h o u s a nd.

c . R ea s o n: T h e dis c r epa nc y c a u s ed is du e t o t h e r ea s o n t h a t t h e m o nt h l y c l o s ing nu m b er o f net inc o m e b ef o r e t a x u s ed t o es t im a t e a c c r u ed expens e is dif f er ent f r o m t h e a u dit o ne.

d. T r ea t m ent : T h e dif f er enc e w o u l d b e t r ea t ed a s c h a ng e in a c c o u nt ing es t im a t es o f y ea r 20 1 6 .

( 2) T h e a m o u nt o f a ny em pl o y ee c o m pens a t io n dis t r ib u t ed in s t o c k s , a nd t h e s iz e o f t h a t a m o u nt a s a per c ent a g e o f t h e s u m o f t h e a f t er - t a x net inc o m e s t a t ed in t h e pa r ent c o m pa ny o nl y f ina nc ia l r epo r t s o r indiv idu a l f ina nc ia l r epo r t s f o r t h e c u r r ent per io d a nd t o t a l em pl o y ee c o m pens a t io n: I t is no t a ppl ic a b l e du e t o no em pl o y ee c o m pens a t io n dis t r ib u t ed in t h e f o r m o f s t o c k .

27

27

4 . T h e a c t u a l dis t r ib u t io n o f em pl o y ee, dir ec t o r , a nd s u per v is o r c o m pens a t io n f o r y ea r 20 1 4 ( w it h a n indic a t io n o f t h e nu m b er o f s h a r es , m o net a r y a m o u nt , a nd s t o c k pr ic e, o f t h e s h a r es dis t r ib u t ed) , a nd, if t h er e is a ny dis c r epa nc y b et w een t h e a c t u a l dis t r ib u t io n a nd t h e r ec o g niz ed em pl o y ee, dir ec t o r , o r s u per v is o r c o m pens a t io n, a ddit io na l l y t h e dis c r epa nc y , c a u s e, a nd h o w it is t r ea t ed:

Y ea r 20 1 4

D is t r ib u t ed w it h t h e r es o l u t io n f r o m t h e

Annu a l G ener a l M eet ing

R ec o g niz ed expens e

D if f er enc e ( N o t e)

E xpl a na t io n

D is t r ib u t io n s t a t u s

A. E m pl o y ee b o nu s dis t r ib u t ed in t h e f o r m o f c a s h

B . E m pl o y ee b o nu s dis t r ib u t ed in t h e f o r m o f s t o c k ( 1 ) s h a r es ( 2) a m o u nt ( 3 ) s t o c k pr ic e

C . R em u ner a t io n t o D ir ec t o r s a nd S u per v is o r s

N T $ 7 , 1 8 7 t h o u s a nd - - - -

N T $ 4 , 9 7 3 t h o u s a nd

- - - -

N T $ 2, 21 4 t h o u s a nd

- - - -

T h e dif f er enc e is du e t o es t im a t io n o f s pec ia l r es er v e is dif f er ent f r o m t h e f ina l o ne pr o v ided t o t h e a u dit o r , a nd t h e m o nt h l y c l o s ing nu m b er o f net inc o m e b ef o r e t a x a nd em pl o y ee b o nu s u s ed t o es t im a t e a c c r u ed expens e is dif f er ent f r o m t h e a u dit o ne.

N o t e: T h e dif f er enc e a m o u nt ing t o N T $ 2, 21 4 t h o u s a nd r eg a r ded a s c h a ng es in a c c o u nt ing es t im a t es a nd r ec o g niz ed a s pr o f it o r l o s s o f y ea r 20 1 5 .

28

28

V . Internal Control Statement

Internal Control Statement

F ina nc ia l S u per v is o r y C o m m is s io n,

O n b eh a l f o f C T B C B a nk C o . , L t d. , w e h er eb y c er t if y t h a t f o r t h e f is c a l y ea r o f 20 1 5 , t h e c o m pa ny h a s du l y c o m pl ied w it h t h e " I m pl em ent a t io n R u l es o f I nt er na l Au dit a nd I nt er na l C o nt r o l S y s t em o f F ina nc ia l H o l ding C o m pa nies a nd B a nk ing I ndu s t r ies " in es t a b l is h ing it s int er na l c o nt r o l s y s t em , im pl em ent ing r is k m a na g em ent m ec h a nis m , des ig na t ing a n independent a u dit depa r t m ent t o c o ndu c t a u dit s , a nd r eg u l a r l y r epo r t ing t o t h e c o m pa ny ' s B o a r d o f D ir ec t o r s a nd t h e Au dit C o m m it t ee. F o r t h e s ec u r it ies b u s ines s o per a t io ns , t h e c o m pa ny h a s ev a l u a t ed t h e ef f ec t iv enes s o f r el a t ed int er na l c o nt r o l s y s t em in a c c o r da nc e w it h r eq u ir em ent s pr o m u l g a t ed b y " R eg u l a t io ns G o v er ning t h e E s t a b l is h m ent o f I nt er na l C o nt r o l S y s t em s b y S er v ic e E nt er pr is es in S ec u r it ies a nd F u t u r es M a r k et s " . Af t er pr u dent ev a l u a t io n, w e h er eb y c er t if y t h a t exc ept it em s l is t ed o n t h e a t t a c h m ent s , t h e c o m pa ny c o m pl ies w it h a l l r el a t ed l a w s a nd r eg u l a t io ns , a nd t h e int er na l c o nt r o l s a r e ef f ec t iv el y in pl a c e. T h is s t a t em ent w il l b e inc l u ded in t h e c o m pa ny ’ s a nnu a l r epo r t a nd pu b l ic pr o s pec t u s es , a nd b e dis c l o s ed t o t h e pu b l ic .

W e u nder s t a nd t h a t w e a r e l eg a l l y b o u nd t o Ar t ic l e 20 , 3 2, 1 7 1 a nd 1 7 4 o f t h e S ec u r it ies a nd E xc h a ng e Ac t .

S inc er el y y o u r s , C h a ir m a n P r es ident G ener a l Au dit o r C h ief C o m pl ia nc e O f f ic er

28

V . Internal Control Statement

Internal Control Statement

T o : F ina nc ia l S u per v is o r y C o m m is s io n,

O n b eh a l f o f C T B C B a nk C o . , L t d. , w e h er eb y c er t if y t h a t f o r t h e f is c a l y ea r o f 20 1 5 , t h e c o m pa ny h a s du l y c o m pl ied w it h t h e " I m pl em ent a t io n R u l es o f I nt er na l Au dit a nd I nt er na l C o nt r o l S y s t em o f F ina nc ia l H o l ding C o m pa nies a nd B a nk ing I ndu s t r ies " in es t a b l is h ing it s int er na l c o nt r o l s y s t em , im pl em ent ing r is k m a na g em ent m ec h a nis m , des ig na t ing a n independent a u dit depa r t m ent t o c o ndu c t a u dit s , a nd r eg u l a r l y r epo r t ing t o t h e c o m pa ny ' s B o a r d o f D ir ec t o r s a nd t h e Au dit C o m m it t ee. F o r t h e s ec u r it ies b u s ines s o per a t io ns , t h e c o m pa ny h a s ev a l u a t ed t h e ef f ec t iv enes s o f r el a t ed int er na l c o nt r o l s y s t em in a c c o r da nc e w it h r eq u ir em ent s pr o m u l g a t ed b y " R eg u l a t io ns G o v er ning t h e E s t a b l is h m ent o f I nt er na l C o nt r o l S y s t em s b y S er v ic e E nt er pr is es in S ec u r it ies a nd F u t u r es M a r k et s " . Af t er pr u dent ev a l u a t io n, w e h er eb y c er t if y t h a t exc ept it em s l is t ed o n t h e a t t a c h m ent s , t h e c o m pa ny c o m pl ies w it h a l l r el a t ed l a w s a nd r eg u l a t io ns , a nd t h e int er na l c o nt r o l s a r e ef f ec t iv el y in pl a c e. T h is s t a t em ent w il l b e inc l u ded in t h e c o m pa ny ’ s a nnu a l r epo r t a nd pu b l ic pr o s pec t u s es , a nd b e dis c l o s ed t o t h e pu b l ic .

W e u nder s t a nd t h a t w e a r e l eg a l l y b o u nd t o Ar t ic l e 20 , 3 2, 1 7 1 a nd 1 7 4 o f t h e S ec u r it ies a nd E xc h a ng e Ac t .

S inc er el y y o u r s , C h a ir m a n P r es ident G ener a l Au dit o r C h ief C o m pl ia nc e O f f ic er

29

2 9

CTBC Bank Co., Ltd. Is s u e and Correctiv e Actions f or Internal Control Statement

As of December 31, 2015

Is s u e f or Imp rov ement Correctiv e Actions Target Comp l etion Date

1 . An em pl o y ee m a nipu l a t ed a c u s t o m er ’ s a c c o u nt s a nd ea r l y t er m ina t ed ins u r a nc e po l ic ies w it h o u t c u s t o m er ’ s c o ns ent . I t po int s t o t h e im pr o per im pl em ent a t io n o f t h e int er na l c o nt r o l a nd ins pec t io n, w h ic h im pedes s o u nd b a nk ing o per a t io ns . T h e B a nk is f o u nd no n- c o m pl ia nt w it h P a r a g r a ph 1 , Ar t ic l e 4 5 - 1 o f t h e B a nk ing Ac t . O n t h e b a s is o f I t em 7 , Ar t ic l e 1 29 o f t h e s a m e Ac t , F ina nc ia l S u per v is o r y C o m m is s io n ( F S C ) im po s ed a n a dm inis t r a t iv e f ine o f N T D 3 m il l io n a g a ins t t h e B a nk . I n a ddit io n, pu r s u a nt t o I t em 3 , P a r a g r a ph 1 , Ar t ic l e 6 1 - 1 o f t h e s a m e Ac t , F S C r eq u ir ed t h e B a nk t o dis m is s t h e inv o l v ed em pl o y ee. < F S C L et t er N o . 1 0 4 0 0 1 9 4 9 5 1 da t ed Au g u s t 27 , 20 1 5 >

( 1 ) S et t ing o f des ig na t ed a c c o u nt s t h r o u g h o nl ine r em it t a nc e t o t h ir d pa r t ies h a s b een m a na g ed b y c a r ing inq u ir y a nd independent c a l l b a c k t o c u s t o m er s . I n a ddit io n, f r eq u ent ea r l y - t er m ina t io n o f ins u r a nc e po l ic ies w it h in a s h o r t per io d o f t im e w il l b e c l o s el y m o nit o r ed a nd m a na g ed t h r o u g h s y s t em s .

( 2) T h e s t a f f s h a v e b een r eit er a t ed a nd pr o h ib it ed t o depo s it o r w it h dr a w c a s h o n b eh a l f o f c u s t o m er s . I n a ddit io n, t h e B a nk h a s r einf o r c ed t h e r ev iew m ec h a nis m s f o r s er v ic es o r t r a ns a c t io ns del iv er ed o u t s ide o f b r a nc h pr em is es .

( 3 ) T h e R ew a r ds a nd D is c ipl ina r y C o m m it t ee dis m is s ed t h e no n- c o m pl ia nt em pl o y ee a nd r ev o k ed h is ins u r a nc e l ic ens e.

C o m pl et ed in Apr il 20 1 5 .

2. An em pl o y ee f o r g ed c u s t o m er s ' s ig na t u r es o n t r a ns a c t io n o r der s , w h ic h im pedes s o u nd b a nk ing o per a t io ns . F S C is s u ed a r epr im a nd l et t er a g a ins t t h e B a nk o n t h e b a s is o f P a r a g r a ph 1 , Ar t ic l e 6 1 - 1 o f t h e B a nk ing Ac t . I n a ddit io n, pu r s u a nt t o I t em 3 , P a r a g r a ph 1 , Ar t ic l e 6 1 - 1 o f t h e s a m e Ac t , F S C r eq u ir ed t h e B a nk t o dis m is s t h e inv o l v ed em pl o y ee. < F S C L et t er N o . 1 0 4 0 0 25 9 25 0 da t ed D ec em b er 9 , 20 1 5 >

( 1 ) S h o r t t er m c o nt r o l s : I ndependent v er if ic a t io n o f c u s t o m er ’ s ident it y b y a no n- F ina nc ia l Adv is er s t a f f f o r o v er - t h e- c o u nt er inv es t m ent t r a ns a c t io ns .

( 2) M ediu m t o l o ng t er m c o nt r o l s : R o l l o u t o f P r o j ec t t o r einf o r c e s eg r eg a t io n o f du t ies b et w een s a l es a nd o per a t io ns .

T o b e c o m pl et ed b y 20 1 6 Q 3 .

3 . C T B C I ns u r a nc e B r o k er C o . , L t d. w a s f o u nd v io l a t ing t h e I ns u r a nc e Ac t w h en c o ndu c t ing ins u r a nc e b r o k er b u s ines s . O n t h e b a s is o f Ar t ic l e 1 6 7 - 2 a nd 1 6 7 - 3 o f t h e I ns u r a nc e Ac t , F S C is s u ed a r epr im a nd l et t er a nd im po s ed a n a dm inis t r a t iv e f ine o f N T D 6 0 0 t h o u s a nd a g a ins t t h e C o m pa ny . < F S C L et t er N o . 1 0 4 0 25 6 8 6 0 2 da t ed Au g u s t 27 , 20 1 5 >

( 1 ) R eit er a t io n w a s g iv en o n t h e g u idel ines o f ins u r a nc e s o l ic it a t io n.

( 2) An ext r a c o nt r o l h a s b een es t a b l is h ed t o v er if y c u s t o m er s ’ ident it y in a b r a nc h w h en a n a ppl ic a nt a ppl ies f o r t er m ina t io n o f ins u r a nc e po l ic y s o o n a f t er pu r c h a s ing .

C o m pl et ed in M a y 20 1 5 .

30

3 0


( T h is c a s e o c c u r r ed pr io r t o t h e da t e o f t h e m er g er b et w een C T B C B a nk a nd C T B C I ns u r a nc e B r o k er s o n N o v em b er 3 0 , 20 1 5 . )

( 3 ) T h e m ec h a nis m s o f c o nf ir m a t io n a nd c a l l b a c k h a v e b een es t a b l is h ed f o r s er v ic es a nd t r a ns a c t io ns del iv er ed o u t s ide o f b r a nc h pr em is es .

( 4 ) A pr ev ent io n m ec h a nis m a g a ins t s a l es m is c o ndu c t r is k h a s b een a c t iv a t ed.

4 . F S C c o ndu c t ed a f u l l - s c o pe exa m ina t io n in 20 1 4 ( R epo r t N o . 1 0 3 H 0 5 2) w it h t h e f o l l o w ing m a j o r f inding s . T h e B a nk s h a l l enf o r c e s u per v is io n t o ens u r e s o u ndnes s o f c o m pl ia nc e s y s t em a nd ef f ec t iv enes s o f b o a r d o v er s ig h t . ( 1 ) T h e c o m pl ia nc e s y s t em h a s no t

b een s o u ndl y im pl em ent ed f o r a c q u is it io n a nd dis po s a l o f s o m e m a j o r a s s et s inv o l v ed in q u a s i- int er es t ed pa r t ies .

( 2) I t w a s f o u nd t h a t a n em pl o y ee h el ped a t h ir d pa r t y c o m pa ny in a n a s s et t r a ns a c t io n b y ev a ding r eg u l a t o r y r eq u ir em ent a nd o v er s ig h t o f t h e b o a r d o f dir ec t o r s , w h ic h im pa c t ed t h e c o nt r o l m ec h a nis m o f int er es t ed pa r t y t r a ns a c t io ns .

( 3 ) T h e dis po s a l o f a n im pa ir ed a s s et o f t h e B a nk inv o l v ed t h e r el a t iv e o f a s enio r m a na g er . S u c h t r a ns a c t io n h a s no t b een r epo r t ed t o t h e b o a r d o f dir ec t o r s f o r a ppr o v a l t o pr o t ec t t h e B a nk ' s int er es t s .

( 4 ) C er t a in l o a n inv o l v ed t h e b o r r o w er a nd a n int er es t ed pa r t y o f t h e B a nk a s pa r t ner s in a r ea l es t a t e j o int dev el o pm ent pr o j ec t h a s no t b een r epo r t ed t o t h e b o a r d o f dir ec t o r s f o r r ev iew .

( 1 ) T h e B a nk h a s r einf o r c ed t h e im pl em ent a t io n o f c o nt r o l g u idel ines f o r t r a ns a c t io ns w it h int er es t ed pa r t ies . I n a ddit io n, t h e B a nk h a s ens u r ed t h a t c o u nt er pa r t ies in r el a t ed c a s es w er e neit h er int er es t ed pa r t ies no r q u a s i- int er es t ed pa r t ies .

( 2) I t w a s c l a r if ied t h a t t h is inc ident r es u l t ed f r o m t h e inv o l v ed em pl o y ee' s per s o na l b eh a v io r , w h ic h w a s no t in c o nf l ic t w it h int er es t o f t h e B a nk . R eit er a t io n w a s g iv en t o pr o h ib it em pl o y ees f r o m dea l ing w it h o t h er s ’ per s o na l a f f a ir s w it h in o f f ic e h o u r s .

( 3 ) T h e ident if ic a t io n pr o c es s o f t r a ns a c t io n w it h int er es t ed pa r t ies a nd det er m ina t io n o f u l t im a t e b enef ic ia r ies w er e s t r eng t h ened. I t w a s a l s o v er if ied t h a t c o u nt er pa r t ies in t h is c a s e w er e neit h er int er es t ed pa r t ies no r q u a s i- int er es t ed pa r t ies . E xt er na l l a w y er w a s r eq u es t ed t o inv es t ig a t e t h e c a s e a nd t h e r es u l t indic a t ed no im pa c t o n t h e B a nk ' s int er es t s .

( 4 ) T h e c o nt r o l m ec h a nis m o n es c a l a t ing t h e r ea l es t a t e s ec u r ed l o a ns t o t h e b o a r d o f dir ec t o r s w a s s t r eng t h en; it w a s c l a r if ied t h a t s u c h c a s e did no t inv o l v e t h e dis t r ib u t io n o f int er es t s o f t h e j o int dev el o pm ent pr o j ec t .

C o m pl et ed in S ept em b er 20 1 5 .

31

31


5 . F S C c o ndu c t ed a f u l l - s c o pe exa m ina t io n o n C T B C B a nk , T o k y o B r a nc h ( R epo r t N o . 1 0 4 0 4 9 ) in 20 1 5 . I t w a s f o u nd t h a t t h e o r g a niz a t io n r es t r u c t u r e t o t h e T o k y o B r a nc h init ia t ed b y t h e h ea d o f f ic e m ig h t v io l a t e t h e l o c a l r eg u l a t io ns a s t h e B a nk did no t c o ns u l t t h e l o c a l c o m pl ia nc e o f f ic er a h ea d. I n a ddit io n, t h e C o m pl ia nc e depa r t m ent a nd t h e I nt er na l Au dit f u nc t io n a t t h e h ea d o f f ic e did no t r epo r t s u c h m a t t er t o t h e b o a r d o f dir ec t o r s . T h e C o m pl ia nc e a nd I nt er na l Au dit f u nc t io ns a t t h e h ea d o f f ic e h a v e t o b e enh a nc ed.

( 1 ) L o c a l c o m pl ia nc e o f f ic er s w il l b e c o ns u l t ed a h ea d f o r s ig nif ic a nt o r g a niz a t io na l c h a ng e t h a t m a y im pa c t o v er s ea s b r a nc h es ’ b u s ines s a f t er w a r ds . Any c o ns ider a t io n o f po t ent ia l v io l a t io n o n l o c a l r eg u l a t io ns s h a l l b e es c a l a t ed t o t h e b o a r d o f dir ec t o r s t o s t r eng t h en t h e c o m pl ia nc e r is k c o nt r o l .

( 2) Any f o r m s o f w r it t en c o m m ent s pr o v ided b y l o c a l r eg u l a t o r s in r eg a r d t o ins pec t io n o r s u per v is io n r es u l t s w il l b e s u b m it t ed t o t h e F S C a nd es c a l a t ed t o t h e b o a r d o f dir ec t o r s b y int er na l a u dit . C o r r ec t iv e a c t io ns w il l b e f o l l o w ed u p o n a r eg u l a r b a s is .

I n w r it ing t o F S C in D ec em b er 20 1 5 a nd F eb r u a r y 20 1 6 w it h im pr o v em ent a c t io ns .

32

3 2

V I. Au dit Committee' s Rep ort of the Financial Statement Of the Las t Y ear

T h e Au dit C o m m it t ee’ s R epo r t

I n a c c o r d a nc e w it h Ar t ic l e 1 4 - 4 o f S ec u r it y a nd E xc h a ng e L a w a nd w it h Ar t ic l e 21 9 o f t h e C o m p a ny Ac t , t h e u nder s ig ned, h a v e du l y exa m ined a nd a c c ept ed a s c o r r e c t t h e f ina nc ia l r epo r t ( u nc o ns o l ida t ed a nd c o ns o l ida t ed) f o r t h e y ea r 20 1 5 a l o ng w it h t h e b u s ines s r epo r t a nd ea r ning s dis t r ib u t io n pl a n s u b m it t ed b y t h e B o a r d o f D ir ec t o r s o f C T B C B a nk C o . , L t d.

C T B C B a nk C o . , L t d. Au dit C o m m it t ee C o nv ener

W en- C h ih L ee T a ipei, T a iw a n, R . O . C .

Apr il 29 , 20 1 6

W en- C h ih L ee T a ipei, T a iw a n, R . O . C .

Apr il 29 , 20 1 6

33

33

V II. H ead Of f ice and Domes tic Branches

Domes tic Branches

Branch Name Addres s Tel ep hone

H ea d O f f ic e ( B a nk ing D epa r t m ent )

1 F . , N o . 1 6 8 , J ing m a o 2nd R d. , N a ng a ng D is t r ic t , T a ipei C it y 1 1 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 3 3 27 1 6 8 8

J h a nc ia n B r a nc h 1 F . , N o . 4 , S ec . 1 , Z h o ng xia o W . R d. , J h o ng z h eng D is t r ic t , T a ipei C it y 1 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 1 1 3 5 9 8

H u a s h a n B r a nc h 1 F . , N o . 5 5 , S ec . 1 , Z h o ng s ia o E . R d. , J h o ng z h eng D is t r ic t , T a ipei C it y 1 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 4 1 3 0 0 0

D o ng m en B r a nc h 1 F . , N o . 21 3 , S ec . 2, S iny i R d. , J h o ng j h eng D is t r ic t , T a ipei C it y 1 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 9 5 8 0 0 0

C h eng j h o ng B r a nc h 1 F . , N o . 8 3 , S ec . 1 , C h o ng c ing S . R d. , J h o ng j h eng D is t r ic t , T a ipei C it y 1 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 8 1 8 7 4 0

D a a n B r a nc h 1 F . , N o . 1 0 2, S ec . 2, R o o s ev el t R d. , J h o ng j h eng D is t r ic t , T a ipei C it y 1 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 3 3 6 5 1 9 8 8

M inc y u a n w es t r o a d B r a nc h 1 F . , N o . 1 0 4 - 1 , M inc y u a n W . R d. , D a t o ng D is t r ic t , T a ipei C it y 1 0 3 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 5 7 29 1 9

C h eng de B r a nc h 1 F . , N o . 1 7 , S ec . 1 , C h eng de R d. , D a t o ng D is t r ic t , T a ipei C it y 1 0 3 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 5 6 20 8 8

S ih u B r a nc h 1 F . , N o . 24 4 , S ec . 1 , N eih u R d. , N eih u D is t r ic t , T a ipei C it y 1 1 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 9 9 9 5 8 8

J h o ng s h a n B r a nc h 1 F . , N o . 1 0 6 - 2, S ec . 2, J h o ng s h a n N . R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 23 5 222

M ins h eng B r a nc h 1 F . , N o . 5 8 , S ec . 1 , M ins h eng E . R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 6 4 1 8 1 8

E a s t M ins h eng B r a nc h 1 F . , N o . 5 1 , S ec . 3 , M ins h eng E . R d. , Z h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 0 9 3 6 5 6

D a z h i B r a nc h 1 F . , N o . 6 3 8 , M ing s h u ei R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 5 0 26 0 0 2

C h eng b ei B r a nc h 1 F . , N o . 21 8 , S o ng j ia ng R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n( R . O . C . ) + 8 8 6 - 2- 25 6 23 7 8 9

N a nj ing E a s t R o a d B r a nc h 1 F . , N o . 1 6 , S ec . 1 , N a nj ing E . R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 23 223 8

C h eng do ng B r a nc h 1 F . , N o . 8 8 , S ec . 2, N a nj ing E . R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 6 7 7 3 7 7

L o ng j ia ng M ini B r a nc h 1 F . , N o . 6 5 , S ec . 3 , N a nj ing E . R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 25 1 5 8 8 1 1

C h a ng An B r a nc h N o . 26 , F u s ing N . R d. , J h o ng s h a n D is t r ic t , T a ipei C it y 1 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 7 8 5 8 8 1

J h u ng l u n B r a nc h 1 F . , N o . 8 5 , S ec . 4 , B a de R d. , S o ng s h a n D is t r ic t , T a ipei C it y 1 0 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 6 7 26 6 9

F u j in B r a nc h 1 F . , N o . 1 6 5 , S ec . 5 , M ins h eng E . R d. , S o ng s h a n D is t r ic t , T a ipei C it y 1 0 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 6 0 27 6 6

S is o ng B r a nc h 1 F . , N o . 1 6 1 , S ec . 5 , N a nj ing E . R d. , S o ng s h a n D is t r ic t , T a ipei C it y 1 0 5 , T a iw a n, ( R . O . C . ) + 8 8 6 - 2- 3 7 6 5 5 5 8 8

F u b ei B r a nc h 1 F . , N o . 3 6 3 , F u s ing N . R d. , S o ng s h a n D is t r ic t , T a ipei C it y 1 0 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 7 7 0 5 5 6 6

D u nb ei B r a nc h 1 F . , N o . 1 22, D u nh u a N . R d. , S o ng s h a n D is t r ic t , T a ipei C it y 1 0 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 1 3 3 3 22

R ena i B r a nc h 1 F . , N o . 3 4 1 , S ec . 4 , R ena i R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 7 5 4 6 0 0

Anh e B r a nc h 1 F . , N o . 1 9 5 , S ec . 2, Anh e R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 3 8 6 1 7 1

Y a nj i B r a nc h 1 F . , N o . 29 8 , S ec . 4 , J h o ng s ia o E . R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 7 1 6 0 0 0

J h o ng s ia o B r a nc h 1 F . , N o . 7 1 , S ec . 4 , J h o ng s ia o E . R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 5 20 3 1 0

S iny i B r a nc h 1 F . , N o . 23 6 , S ec . 4 , S iny i R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 0 7 9 9 7 7

F u s ing B r a nc h 1 F . , N o . 25 1 , S ec . 1 , D u nh u a S . R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 7 7 1 9 8 8

D u nna n B r a nc h 1 F . , N o . 6 8 , S ec . 2, D u nh u a S . R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 25 3 6 1 6

G u ng g u a n B r a nc h 1 F . , N o . 3 1 1 , S ec . 3 , R o o s ev el t R d. , D a a n D is t r ic t , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 6 23 3 7 7

W a nh u a B r a nc h 1 F . , N o . 9 2, S ec . 2, C h a ng s h a S t . , W a nh u a D is t r ic t , T a ipei C it y 1 0 8 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 8 9 8 1 8 8

Y o ng j i B r a nc h 1 F . , N o . 1 8 , Y o ng j i R d. , S iny i D is t r ic t , T a ipei C it y 1 1 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 6 1 7 9 9 9

S o ng s h a n B r a nc h 1 F . , N o . 5 5 0 , S ec . 5 , J h o ng s ia o E . R d. , S iny i D is t r ic t , T a ipei C it y 1 1 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 23 4 6 6 7 1 1

S h inf u B r a nc h 1 F . , N o . 9 , S o ng g a o R d. , S iny i D is t r ic t , T a ipei C it y 1 1 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 221 6 6 8

34

3 4


T ia nm u B r a nc h 1 F . , N o . 9 0 , S ec . 6 , J h o ng s h a n N . R d. , S h ih l in D is t r ic t , T a ipei C it y 1 1 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 28 3 228 8 8

S h ih l in B r a nc h 1 F . , N o . 3 0 7 , J h o ng j h eng R d. , S h ih l in D is t r ic t , T a ipei C it y 1 1 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 28 8 3 9 9 0 0

N o r t h T ia nm u B r a nc h 1 F . , N o . 1 0 , T ia nm u W . R d. , S h il in D is t r ic t , T a ipei C it y 1 1 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 28 7 6 6 1 0 0

J ia nt a n B r a nc h 1 F , N o . 1 5 0 , S ec . 4 , C h eng de R d. , S h il in D is t r ic t , T a ipei C it y 1 1 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 28 8 27 9 7 9

S h ih pa i B r a nc h 1 F . , N o . 4 6 , S ec . 2, S h ih pa i R d. , B eit o u D is t r ic t , T a ipei C it y 1 1 2, T a iw a n ( R . O . C . ) + 8 8 6 - 2- 28 21 3 3 6 6

B eit o u B r a nc h 1 F . , N o . 21 7 , G u a ng m ing R d. , B eit o u D is t r ic t , T a ipei C it y 1 1 2, T a iw a n( R . O . C . ) + 8 8 6 - 2- 28 9 8 3 0 3 9

R u eig u a ng B r a nc h N o . 5 1 4 , S ec . 1 , N eih u R d. , N eih u D is t r ic t , T a ipei C it y 1 1 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 9 8 5 6 0 0

C h eng g o ng B r a nc h 1 F . , N o . 1 6 1 , S ec . 4 , C h eng g o ng R d. , N eih u D is t r ic t , T a ipei C it y 1 1 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 7 9 1 1 6 8 6

N eih u B r a nc h 1 F . , N o . 3 5 8 , S ec . 4 , C h eng g o ng R d. , N eih u D is t r ic t , T a ipei C it y 1 1 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 27 9 3 8 6 6 8

D o ng h u M ini B r a nc h 1 F . , N o . 1 8 2, S ec . 3 , K a ng ning R d. , N eih u D is t r ic t , T a ipei C it y 1 1 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 26 3 1 228 8

M u j h a B r a nc h 1 F . , N o . 6 9 , S ec . 3 , M u j h a R d. , W u ns h a n D is t r ic t , T a ipei C it y 1 1 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 3 7 5 8 9 0

W u ns h a n B r a nc h 1 F . , N o . 24 8 , S ec . 4 , S inh a i R d. , W u ns h a n D is t r ic t , T a ipei C it y 1 1 6 , T a iw a n( R . O . C . ) + 8 8 6 - 2- 29 3 3 5 3 5 8

J ing m ei B r a nc h N o . 4 0 5 , S ec . 6 , R o o s ev el t R d. , W ens h a n D is t r ic t , T a ipei C it y 1 1 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 3 29 8 3 8

K eel u ng B r a nc h 1 F . , N o . 1 5 0 , S iny i R d. , S iny i D is t r ic t , K eel u ng C it y 20 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 24 221 1 6 6

P u c ia n M ini B r a nc h N o . 4 0 9 , S ec . 2, Z h o ng s h a n R d. , B a nq ia o D is t . , N ew T a ipei C it y 220 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 5 5 0 6 6 6

B a ns in B r a nc h 1 F . , N o . 29 3 - 1 , S ec . 1 , J h o ng s h a n R d. , B a nc ia o D is t r ic t , N ew T a ipei C it y 220 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 9 6 1 1 5 0 0

B a nc ia o B r a nc h 1 F . , N o . 1 8 7 , S ec . 1 , W u nh u a R d. , B a nc ia o D is t r ic t , N ew T a ipei C it y 220 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 6 0 6 6 0 0

C h o ng c ing B r a nc h 1 F . , N o . 29 0 , C h o ng c ing R d. , B a nc ia o D is t r ic t , N ew T a ipei C it y 220 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 6 3 4 5 6 7

S inb a nt ec y u B r a nc h 1 F . , N o . 8 8 , S ec . 2, S ia nm in B l v d. , B a nq ia o D is t r ic t , N ew T a ipei C it y 220 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 6 1 9 6 6 6

J ia ng c u ei B r a nc h 1 F . , N o . 8 , S ec . 3 , S h u a ng 1 0 t h R d. , B a nc ia o D is t r ic t , N ew T a ipei C it y 220 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 225 7 8 9 9 9

S ij h ih B r a nc h 1 F . , N o . 21 0 , S ec . 2, D a t o ng R d. , S ij h ih D is t r ic t , N ew T a ipei C it y 221 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 26 4 8 9 6 9 9

S india n B r a nc h 1 F . , N o . 6 , S ec . 2, B eis in R d. , S india n D is t r ic t , N ew T a ipei C it y 23 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 1 29 9 8 8

N o r t h S india n B r a nc h 1 F . , N o . 25 , M inc y u a n R d. , S india n D is t r ic t , N ew T a ipei C it y 23 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 1 3 5 0 0 0

B a o c ia ng B r a nc h 1 F . , N o . 3 1 , B a o c ia ng R d. , S india n D is t r ic t , N ew T a ipei C it y 23 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 1 23 3 6 6

Y o ng h e B r a nc h 1 F . , N o . 21 5 , S ec . 1 , J h o ng s h a n R d. , Y o ng h e D is t r ic t , N ew T a ipei C it y 23 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 9 23 5 0 0 8

S h u a ng h e B r a nc h 1 F . , N o . 5 8 8 , J h o ng j h eng R d. , Y o ng h e D is t r ic t , N ew T a ipei C it y 23 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 23 3 3 3 3

N a s h ih j ia o B r a nc h 1 F . , N o . 6 5 , J h o ng j h eng R d. , Y o ng h e D is t r ic t , N ew T a ipei C it y 23 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 4 9 8 8 3 8

B a nh e M ini B r a nc h 1 F . , N o . 7 26 , J h o ng j h eng R d. , J h o ng h e D is t r ic t , N ew T a ipei C it y 23 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 226 1 28 8

J h o ng h e B r a nc h 1 F . , N o . 26 1 , S ec . 2, Z h o ng s h a n R d. , Z h o ng h e D is t r ic t . , N ew T a ipei C it y 23 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 224 5 227 7

T u c h eng B r a nc h 1 F . , N o . 3 0 4 , S ec . 2, J h o ng y a ng R d. , T u c h eng D is t r ic t , N ew T a ipei C it y 23 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 226 3 0 8 8 8

J inc h eng B r a nc h 1 F . , N o . 1 6 , S ec . 3 , J inc h eng R d. , T u c h eng D is t r ic t , N ew T a ipei C it y 23 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 226 0 1 1 7 7

S h u l in B r a nc h 1 F . , N o . 1 22, S ec . 1 , J h o ng s h a n R d. , S h u l in D is t r ic t , N ew T a ipei C it y 23 8 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 26 8 1 23 4 5

S a nh e B r a nc h 1 F . , N o . 1 1 9 , S ec . 4 , S a nh e R d. , S a nc h o ng D is t r ic t , N ew T a ipei C it y 24 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 228 6 3 28 6

S a nc h o ng B r a nc h 1 F . , N o . 20 8 , J h eng y i N . R d. , S a nc h o ng D is t r ic t , N ew T a ipei C it y 24 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 8 28 1 21

E r c h o ng pu M ini B r a nc h 1 F . , N o . 7 0 - 1 , S ec . 1 , G u a ng f u R d. , S a nc h o ng D is t r ic t , N ew T a ipei C it y 24 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 9 5 9 8 7 6

C h o ng y a ng B r a nc h 1 F . , N o . 6 6 , S ec . 1 , C h o ng y a ng R d. , S a nc h o ng D is t r ic t , N ew T a ipei C it y 24 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 9 8 8 1 1 9 9

C h o ng s in B r a nc h 1 F . , N o . 4 2- 1 , S ec . 2, C h o ng s in R d. , S a nc h o ng D is t r ic t , N ew T a ipei C it y 24 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 9 7 26 1 8 9

S inj h u a ng B r a nc h 1 F . , N o . 3 20 , J h o ng j h eng R d. , S inj h u a ng D is t r ic t , N ew T a ipei C it y 24 2, T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 9 29 6 9 6

35

3 5


D a nf o ng B r a nc h 1 F . , N o . 8 7 9 - 1 5 , J h o ng j h eng R d. , S inj h u a ng D is t r ic t , N ew T a ipei C it y 24 2, T a iw a n ( R . O . C . ) + 8 8 6 - 2- 29 0 6 6 8 8 8

N o r t h S inj h u a ng B r a nc h 1 F . , N o . 5 7 , S ec . 2, J h o ng h u a R d. , S inj h u a ng D is t r ic t , N ew T a ipei C it y 24 2, T a iw a n ( R . O . C . ) + 8 8 6 - 2- 227 7 6 7 8 9

M ina n B r a nc h 1 F . , N o . 1 7 9 , M in- a n R d. , S inj h u a ng D is t r ic t , N ew T a ipei C it y 24 2, T a iw a n ( R . O . C . ) + 8 8 6 - 2- 220 6 8 8 8 7

L u j h o u B r a nc h 1 F . , N o . 21 1 , J h o ng s h a n 1 s t R d. , L u j h o u D is t r ic t , N ew T a ipei C it y 24 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 28 4 8 20 0 8

E a s t L u j h o u B r a nc h 1 F . , N o . 1 3 5 , M inz u R d. , L u j h o u D is t r ic t , N ew T a ipei C it y 24 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 228 3 9 3 0 0

N o r t h L u j h o u B r a nc h 1 F . , N o . 3 5 5 , C h a ng r o ng R d. , L u j h o u D is t r ic t , N ew T a ipei C it y 24 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 228 8 1 9 9 9

D a ns h u ei M ini B r a nc h 1 F . , N o . 1 23 , J h o ng s h a n R d. , D a ns h u ei D is t r ic t , N ew T a ipei C it y 25 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 2- 8 6 3 1 8 8 22

Y il a n B r a nc h 1 F . , N o . 27 1 , S ec . 2, J h o ng s h a n R d. , Y il a n C it y , Y il a n C o u nt y 26 0 , T a iw a n( R . O . C . ) + 8 8 6 - 3 - 9 3 5 1 1 22

L o h do ng B r a nc h 1 F . , N o . 23 2, S ing do ng S . R d. , L u o do ng T o w ns h ip, Y il a n C o u nt y 26 5 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 9 5 7 4 3 20

H s inc h u B r a nc h 1 F . , N o . 1 5 8 , J h o ng j h eng R d. , E a s t D is t r ic t , H s inc h u C it y 3 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 5 2226 8 7

G u a ng f u B r a nc h N o . 3 5 , L n. 1 9 , G u a nxin R d. , E a s t D is t r ic t , H s inc h u C it y 3 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 5 7 9 0 6 7 8

J h u k e B r a nc h 1 F . , N o . 2, J ins h a n S t . , E a s t D is t r ic t , H s inc h u C it y 3 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 5 6 3 8 0 8 0

E a s t H s inc h u B r a nc h 1 F . , N o . 3 2, J ia nj h o ng R d. , E a s t D is t r ic t , H s inc h u C it y 3 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 5 7 4 9 1 9 0

B a o s h a n B r a nc h N o . 3 0 1 , S h ih pin R d. , E a s t D is t r ic t , H s inc h u C it y 3 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 5 6 28 8 7 7

J ing g u o B r a nc h 1 F . , N o . 3 7 5 , S ec . 1 , J ing g u o R d. , H s inc h u C it y 3 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 5 3 5 7 6 5 5

J h u pei B r a nc h 1 F . , N o . 4 9 , G u a ng m ing 6 t h R d. , J h u b ei C it y , H s inc h u C o u nt y 3 0 2, T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 6 5 6 0 222

J h o ng y u a n B r a nc h 1 F . , N o . 4 4 5 , S ec . 2, J h o ng b ei R d. , J h o ng l i D is t , T a o y u a n C it y 3 20 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 4 6 6 221 1

N eil i M ini B r a nc h 1 F . , N o . 26 2, S ec . 1 , Z h o ng h u a R d. , J h o ng l i D is t , T a o y u a n C it y 3 20 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 4 6 1 1 9 9 8

J h o ng l i B r a nc h 1 F . , N o . 5 0 0 , Y a nping R d. , J h o ng l i D is t , T a o y u a n C it y 3 20 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 4 223 1 3 1

N a n J u ng L i B r a nc h N o . 6 8 , H u a nna n R d. , P ing z h en D is t , T a o y u a n C it y 3 24 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 4 0 28 7 8 8

Y iw u n B r a nc h N o . 1 3 5 1 , Z h o ng z h eng R d. , T a o y u a n D is t , T a o y u a n C it y 3 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 3 0 1 8 0 0 0

T a o y u a n B r a nc h 1 F . , N o . 3 2, S ec . 1 , C h eng g o ng R d. , T a o y u a n D is t , T a o y u a n C it y 3 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 3 3 7 3 26 6

S o u t h T a o y u a n B r a nc h 1 F . , N o . 3 8 9 , F u s ing R d. , T a o y u a n D is t , T a o y u a n C it y 3 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 3 3 8 8 8 6 6

N o r t h T a o y u a n B r a nc h 1 F . , N o . 1 24 , J ing g u o R d. , T a o y u a n D is t , T a o y u a n C it y 3 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 3 1 5 0 5 6 6

L ink o u B r a nc h 1 F . , N o . 23 3 , F u xing 1 s t R d. , G u is h a n D is t , T a o y u a n C it y 3 3 3 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 3 9 6 27 7 7

B a de B r a nc h 1 F . , N o . 9 6 5 , S ec . 1 , J ies h o u R d. , B a de D is t , T a o y u a n C it y 3 3 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 3 7 1 6 5 6 5

N a nk a n B r a nc h 1 F . , N o . 25 7 , J h o ng j h eng R d. , L u j h u D is t , T a o y u a n C it y 3 3 8 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 3 21 221 1

T o u f en B r a nc h 1 F . , N o . 9 5 1 , J h o ng h u a R d. , T o u f en C it y , M ia o l i C o u nt y 3 5 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 7 6 9 5 6 7 8

T a ic h u ng B r a nc h 1 F . , N o . 5 0 , M inz u R d. , C ent r a l D is t r ic t , T a ic h u ng C it y 4 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 2229 21 6 1

K eb o g u a n B r a nc h 1 F . , N o . 23 9 , S ec . 2, T a iw a n B l v d. , W es t D is t , T a ic h u ng C it y 4 0 3 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 23 1 0 1 25 8

C h u ng g a ng B r a nc h 1 F . , N o . 5 3 6 , S ec . 2, T a iw a n B l v d. , W es t D is t , T a ic h u ng C it y 4 0 3 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 23 1 4 9 9 9 9

N o r t h T a ic h u ng M ini B r a nc h 1 F . , N o . 7 7 , Y u c a i N . R d. , N o r t h D is t r ic t , T a ic h u ng C it y 4 0 4 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 2223 1 6 6 6

W u ns in B r a nc h 1 F . , N o . 8 7 5 , S ec . 4 , W u ns in R d. , B eit u n D is t r ic t , T a ic h u ng C it y 4 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 224 6 9 9 8 8

S h iz h eng B r a nc h N o . 9 3 , S ec . 2, W enxin R d. , X it u n D is t , T a ic h u ng C it y 4 0 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 225 4 5 3 3 3

S it u n B r a nc h 1 F . , N o . 8 5 9 , S ec . 4 , T a iw a n B l v d. , S it u n D is t , T a ic h u ng C it y 4 0 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 23 5 5 1 0 0 0

N a nt u n B r a nc h 1 F . , N o . 23 4 , S ec . 2, W u c y u a n W . R d. , N a nt u n D is t r ic t , T a ic h u ng C it y 4 0 8 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 24 7 1 226 8

G o ng y i B r a nc h 1 F . , N o . 5 3 , S ec . 2, G o ng y i R d. , N a nt u n D is t r ic t , T a ic h u ng C it y 4 0 8 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 23 29 1 1 1 1

H u eij h o ng M ini B r a nc h N o . 8 8 , S ec . 3 , H u eij h o ng R d. , N a nt u n D is t . , T a ic h u ng C it y 4 0 8 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 23 8 9 1 26 9

36

3 6


D a l i B r a nc h 1 F . , N o . 20 , D o ng r o ng R d. , D a l i D is t r ic t , T a ic h u ng C it y 4 1 2, T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 24 8 1 3 3 3 3

F o ng y u a n B r a nc h 1 F . , N o . 5 4 5 , J h o ng j h eng R d. , F o ng y u a n D is t r ic t , T a ic h u ng C it y 4 20 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 25 20 1 0 1 0

N a nt o u M ini B r a nc h 1 F . , N o . 220 , J h o ng s h a n S t . , N a nt o u C it y , N a nt o u C o u nt y 5 4 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 9 - 220 7 7 1 1

C h a ng h u a B r a nc h 1 F . , N o . 7 6 , S ia o y a ng R d. , C h a ng h u a C it y , C h a ng h u a C o u nt y 5 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 7 27 9 9 3 3

Y u a nl in B r a nc h 1 F . , N o . 3 7 2, J h o ng j h eng R d. , Y u a nl in C it y , C h a ng h u a C o u nt y 5 1 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 4 - 8 3 6 8 6 7 6

C h ia y i B r a nc h 1 F . , N o . 24 1 , M ins h eng N . R d. , C h ia y i C it y 6 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 5 - 228 6 6 0 0

D o u l io u B r a nc h 1 F . , N o . 2, S ing h u a S t . , D o u l io u C it y , Y u nl in C o u nt y 6 4 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 5 - 5 3 6 0 0 9 9

C ent r a l T a ina n B r a nc h 1 F . , N o . 1 6 7 , S ec . 1 , M ins h eng R d. , W es t C ent r a l D is t r ic t , T a ina n C it y 7 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 24 1 23 1 8

T a ina n B r a nc h 1 F . , N o . 1 5 9 , S ec . 1 , F u c ia n R d. , W es t C ent r a l D is t r ic t , T a ina n C it y 7 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 21 5 23 4 5

W es t T a ina n B r a nc h 1 F . , N o . 21 2, S ec . 4 , J inh u a R d. , W es t C ent r a l D is t . , T a ina n C it y 7 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 226 3 6 3 6

J h o ng h u a B r a nc h 1 F . , N o . 1 9 5 , S ec . 2, J h o ng h u a E . R d. , E a s t D is t r ic t , T a ina n C it y 7 0 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 3 3 5 3 5 3 5

E a s t T a ina n B r a nc h 1 F . , N o . 29 0 , S ec . 2, C h a ng r o ng R d. , E a s t D is t r ic t , T a ina n C it y 7 0 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 20 8 5 5 22

S o u t h T a ina n B r a nc h 1 F . , N o . 23 6 , S ec . 2, J ia nk a ng R d. , S o u t h D is t r ic t , T a ina n C it y 7 0 2, T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 29 1 9 9 9 9

Y a n H a ng B r a nc h 1 F . , N o . 1 1 1 , J h o ng z h eng R d. , Y o ng k a ng D is t . , T a ina n C it y 7 1 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 25 3 9 1 9 9

Y o ng k a ng B r a nc h 1 F . , N o . 4 25 , J h o ng h u a R d. , Y o ng k a ng D is t r ic t , T a ina n C it y 7 1 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 20 25 7 8 7

R ende M ini B r a nc h 1 F . , N o . 4 7 8 , Z h o ng s h a n R d. , R ende D is t r ic t , T a ina n C it y 7 1 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 27 9 8 0 9 9

J ia l i B r a nc h 1 F . , N o . 4 1 0 , J h o ng s h a n R d. , J ia l i D is t r ic t , T a ina n C it y 7 22, T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 7 221 3 3 5

S iny ing B r a nc h 1 F . , N o . 1 3 7 , J h o ng s h a n R d. , S iny ing D is t r ic t , T a ina n C it y 7 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 6 - 6 3 3 6 7 8 9

S ins ing B r a nc h 1 F . , N o . 20 6 , M ins h eng 1 s t R d. , S ins ing D is t r ic t , K a o h s iu ng C it y 8 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 226 23 25

M inz u B r a nc h 1 F . , N o . 9 7 , M inz u 2nd R d. , S ins ing D is t r ic t , K a o h s iu ng C it y 8 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 23 8 6 5 6 7

K a o h s iu ng B r a nc h 1 F . , N o . 1 6 8 , J h o ng j h eng 4 t h R d. , C ia nj in D is t r ic t , K a o h s iu ng C it y 8 0 1 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 23 1 8 1 4 1

E a s t K a o h s iu ng B r a nc h 1 F . , N o . 29 , C ing nia n 1 s t R d. , L ing y a D is t r ic t , K a o h s iu ng C it y 8 0 2, T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 5 3 5 1 8 8 5

S o u t h K a o h s iu ng B r a nc h 1 F . , N o . 21 , Y is in 2nd R d. , C ia nj h en D is t r ic t , K a o h s iu ng C it y 8 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 3 3 6 6 7 6 8

C ia nj h en M ini B r a nc h 1 F . , N o . 4 8 0 , R u eil o ng R d. , C ia nj h en D is t r ic t , K a o h s iu ng C it y 8 0 6 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 7 26 1 0 6 6

J io u r u B r a nc h 1 F . , N o . 5 5 1 , J io u r u 1 s t R d. , S a nm in D is t r ic t , K a o h s iu ng C it y 8 0 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 3 8 0 5 5 5 8

S a nm in B r a nc h 1 F . , N o . 3 6 6 , J io u r u 2nd R d. , S a nm in D is t r ic t , K a o h s iu ng C it y 8 0 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 3 1 6 1 1 5 5

N o r t h K a o h s iu ng B r a nc h 1 F . , N o . 5 2, M ing c h eng 2nd R d. , S a nm in D is t r ic t , K a o h s iu ng C it y 8 0 7 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 3 4 6 1 1 9 9

Y o u c h a ng M ini B r a nc h 1 F . , N o . 8 0 3 - 3 , H o u c h a ng R d. , N a nz ih D is t r ic t , K a o h s iu ng C it y 8 1 1 , T a iw a n( R . O . C . ) + 8 8 6 - 7 - 3 6 8 1 6 9 9

B o a i B r a nc h 1 F . , N o . 8 8 , B o - a i 2nd R d. , Z u o y ing D is t r ic t . , K a o h s iu ng C it y 8 1 3 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 5 5 6 7 9 0 9

G a ng s h a n M ini B r a nc h 1 F . , N O . 3 8 8 , G a ng s h a n R d. , G a ng s h a n D is t r ic t , K a o h s iu ng C it y 8 20 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 6 23 5 5 0 0

F o ng s h a n B r a nc h 1 F . , N o . 8 5 - 1 , J h o ng s h a n R d. , F o ng s h a n D is t r ic t , K a o h s iu ng C it y 8 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 7 4 5 1 1 9 9

W u j ia B r a nc h 1 F . , N o . 6 9 9 , W u j ia 2nd R d. , F o ng s h a n D is t r ic t , K a o h s iu ng C it y 8 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 8 21 5 1 0 1

C ing nia n B r a nc h 1 F . , N o . 3 1 5 , S ec . 2, C ing nia n R d. , F o ng s h a n D is t r ic t , K a o h s iu ng C it y 8 3 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 7 - 7 7 7 7 6 6 8

P ing t u ng B r a nc h 1 F . , N o . 4 5 0 , Z ih y o u R d. , P ing t u ng C it y , P ing t u ng C o u nt y 9 0 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 8 - 7 3 8 3 0 0 0

T a it u ng M ini B r a nc h 1 F . , N o . 27 9 , J h o ng s h a n R d. , T a it u ng C it y , T a it u ng C o u nt y 9 5 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 8 - 9 3 3 9 8 9 8

H u a l ien B r a nc h 1 F . , N o . 3 7 6 , J h o ng s h a n R d. , H u a l ien C it y , H u a l ien C o u nt y 9 7 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 8 3 4 0 5 6 6

E a s t H u a l ien B r a nc h 1 F . , N o . 1 - 7 , G o ng y u a n R d. , H u a l ien C it y , H u a l ien C o u nt y 9 7 0 , T a iw a n ( R . O . C . ) + 8 8 6 - 3 - 8 3 5 1 1 0 1

37

3 7

Ov ers eas Serv ice Ou tl ets B r a nc h

Units Addres s Tel Fax

H o ng K o ng B r a nc h S u it e 28 0 1 , 28 / F . , T w o I nt er na t io na l F ina nc e C ent r e, 8 F ina nc e S t r eet , C ent r a l , H o ng K o ng

8 5 2- 29 1 6 - 1 8 8 8 8 5 2- 28 1 0 - 9 7 4 2

K o w l o o n B r r a nc h 5 / F , T o w er 2, T h e G a t ew a y , N o . 25 C a nt o n R o a d, T s im S h a T s u i, K o w l o o n, H o ng K o ng

8 5 2- 29 1 6 - 1 6 8 8 8 5 2- 28 0 5 - 0 8 9 9

S ing a po r e B r a nc h 8 M a r ina V iew , # 3 3 - 0 2, As ia S q u a r e T o w er 1 , S ing a po r e 0 1 8 9 6 0

6 5 - 6 3 5 1 4 - 8 8 8 6 5 - 6 5 3 25 - 9 9 9

S h a ng h a i B r a nc h 27 F , S h a ng h a i W o r l d F ina nc ia l C ent er , 1 0 0 C ent u r y Av enu e, P u do ng N ew Ar ea , S h a ng h a i 20 0 1 20 , P . R . C .

8 6 - 21 - 20 8 0 - 5 8 8 8 8 6 - 21 - 6 8 7 7 - 8 7 8 8

N ew Y o r k B r a nc h 1 1 F , # 5 21 F if t h Av enu e, N ew Y o r k , N Y 1 0 1 7 5 , U S A 21 2- 4 5 7 - 8 8 8 8 1 - 21 2- 4 5 7 6 6 6 6

N ew D el h i B r a nc h U pper G r o u nd F l o o r , B ir l a T o w er , 25 B a r a k h a m b a R o a d, N ew D el h i 1 1 0 0 0 1 , I ndia

9 1 - 1 1 - 4 3 6 8 8 8 8 8 9 1 - 1 1 - 4 3 6 8 8 8 7 3

S r iper u m b u du r B r a nc h P l o t N o . 4 2 ( o l d N o . 1 0 5 ) C h enna i B a ng a l o r e H ig h w a y s N H 4 , S r iper u m b u du r , K a nc h eepu r a m D is t r ic t , T a m il N a du - 6 0 21 0 5 , I ndia

9 1 - 4 4 - 6 6 227 7 0 0 9 1 - 4 4 - 6 6 227 7 9 9

H o C h i M inh C it y B r a nc h

U nit 9 0 2~ 9 0 9 , 9 t h F l o o r , K u m h o As ia na P l a z a S a ig o n, 3 9 L e D u a n S t . , D is t 1 , H C M C , V iet na m

8 4 8 - 3 9 1 0 - 1 8 8 8 8 4 8 - 3 9 1 0 - 1 9 9 9

T o k y o B r a nc h R o ppo ng i H il l s M o r i T o w er , 3 7 F , 1 0 - 1 R o ppo ng i 6 - C h o m e, M ina t o - K u , T o k y o 1 0 6 - 6 1 3 7 , J a pa n

8 1 - 3 - 5 4 1 3 - 8 1 6 8 8 1 - 3 - 5 4 1 3 - 8 1 4 0

G u a ng z h o u B r a nc h 6 / F , I nt er na t io na l F ina nc e P l a c e, N o . 8 H u a xia R o a d, P ea r l R iv er N ew T o w n, G u a ng z h o u 5 1 0 6 23 , P R C

8 6 - - 20 - 3 8 5 6 - 0 3 8 8 8 6 - 20 - 3 8 5 6 - 0 3 3 3

S h a ng h a i P il o t F r ee T r a de Z o ne S u b - B r a nc h

U nit 0 1 , 0 2, 1 2 , 1 5 t h F l o o r , N o . 5 5 J il o ng R d, C h ina ( S h a ng h a i) P il o t F r ee T r a de Z o ne S h a ng h a i 20 0 1 3 1 , P . R . C h ina

21 - 20 8 0 - 5 8 8 8 21 - 5 0 5 8 - 5 1 1 2

S u b s idia r y


T h e T o k y o S t a r B a nk , L im it ed

2- 3 - 5 Ak a s a k a , M ina t o - K u , T o k y o , 1 0 7 - 8 4 8 0 , J a pa n 8 1 - 3 - 3 5 8 6 - 3 1 1 1 N / A

C T B C B a nk ( P h il ippines ) C o r p.

1 6 t h t o 1 9 t h F l o o r s , F o r t L eg end T o w er s , 3 1 s t S t r eet C o r ner 3 r d Av enu e, B o nif a c io G l o b a l C it y , T a g u ig C it y , P h il ippines 1 6 3 4

6 3 - 2- 9 8 8 9 28 7 6 3 - 2- 5 7 6 - 7 9 3 5

C T B C B a nk C o r p. ( C a na da )

1 5 1 8 W es t B r o a dw a y , V a nc o u v er , B . C . , C a na da , V 6 J 1 W 8 1 - 6 0 4 - 6 8 3 3 8 8 2 1 - 6 0 4 - 6 8 3 3 7 23

C T B C B a nk C o r p. ( U S A) 8 0 1 S . F ig u er o a S t r eet , S u it e 23 0 0 , L o s Ang el es , C A 9 0 0 1 7 , U S A

1 - 3 1 0 - 7 9 1 28 28 1 - 4 24 - 27 7 4 6 9 8

P T B a nk C T B C I ndo nes ia

T a m a r a C ent er , 1 5 t h - 1 7 t h F l . , J l J ender a l S u dir m a n K a v . 24 , J a k a r t a , 1 29 20 , I ndo nes ia

6 2- 21 - 25 5 7 8 7 8 7 6 2- 21 - 3 0 4 0 228 6

38

3 8

R epr es ent a t iv e O f f ic e


B a ng k o k R epr es ent a t iv e O f f ic e

S u it e 8 0 3 , 8 F , G P F W it t h a y u , T o w er A, 9 3 / 1 W ir el es s R o a d, L u m pini, P a t h u m w a n, B a ng k o k 1 0 3 3 0 , T h a il a nd

6 6 - 2- 25 4 3 1 3 9 6 6 - 2- 25 6 6 4 8 0

H a no i R epr es ent a t iv e O f f ic e

E a s t - 3 0 0 2, 3 0 t h F l o o r , L O T T E C ent er H a no i, N o . 5 4 L ieu G ia i S t r eet , C o ng V i W a r d, B a D inh D is t r ic t , H a no i, V iet na m

8 4 - 4 - 3 8 24 9 0 8 8 8 4 - 4 - 3 8 24 9 0 9 9

L o s Ang el es R epr es ent a t iv e O f f ic e

1 7 8 5 1 C o l im a R o a d, S u it e A1 , C it y o f I ndu s t r y , C A9 1 7 4 8 , U S A

1 - 6 26 - 8 3 9 7 6 6 0 1 - 6 26 - 8 3 9 3 5 6 2

B eij ing R epr es ent a t iv e O f f ic e

B - 1 1 1 , T h e G r a nd P a c if ic B u il ding , 8 a , G u a ng h u a R d. , C h a o Y a ng D is t r ic t , B eij ing , P . R . C . 1 0 0 0 26

8 6 - 1 0 - 6 5 8 1 3 7 0 0 8 6 - 1 0 - 6 5 8 1 5 7 0 1

K u a l a L u m pu r R ep. O f f ic e

L o t 1 1 - 0 9 , L ev el 1 1 , M ena r a H a p S eng 2, P l a z a H a p S eng , N o . 1 J a l a n R a m l ee 5 0 25 0 K u a l a L u m pu r , M a l a y s ia

6 0 3 - 20 223 29 9 6 0 3 - 20 22- 3 27 7

S y dney R ep. O f f ic e S u it e 27 0 2, L ev el 27 , 25 9 G eo r g e S t r eet , S y dney , N S W 20 0 0 , Au s t r a l ia

6 1 - 2- 9 25 1 - 3 6 5 5 6 1 - 2- 9 25 1 - 3 6 4 4

Y a ng o n R ep. O f f ic e U nit # 5 0 6 , N o . 5 3 , S t r a nd R o a d, P a b eda n T o w ns h ip, Y a ng o n, M y a nm a r

9 5 1 - 23 0 - 7 3 4 8 9 5 1 - 23 0 - 7 3 4 7

1

1

Appendix 1

CTBC BANK CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL REP ORTS

DECEMBER 31, 2015 AND 2014

AND

INDEP ENDENT AUDITORS’ REP ORT

Addres s : No.166, 168, 170, 186, 188, J ingmao 2nd Rd., Nangang Dis t., Taip ei City 115, Taiw an, R.O.C. Tel ep hone Nu mber: 886- 2- 3327- 7777

2

2

CTBC BANK CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL REP ORTS

Tabl e of Contents

Contents P age C o v er P a g e 1 T a b l e o f C o nt ent s 2 I ndependent Au dit o r s ’ R epo r t 3 C o ns o l ida t ed B a l a nc e S h eet s 4 C o ns o l ida t ed S t a t em ent s o f C o m pr eh ens iv e I nc o m e 5 C o ns o l ida t ed S t a t em ent s o f C h a ng es in S t o c k h o l der s ’ E q u it y 6 C o ns o l ida t ed S t a t em ent s o f C a s h F l o w s 7 N o t es t o C o ns o l ida t ed F ina nc ia l S t a t em ent s 1 . B a s is o f P r es ent a t io n 8 ~ 1 0 2. Appr o v a l D a t e a nd P r o c edu r es o f t h e C o ns o l ida t ed F ina nc ia l R epo r t s 1 0 3 . N ew S t a nda r ds , Am endm ent s a nd I nt er pr et a t io ns 1 0 ~ 1 2 4 . S u m m a r y o f S ig nif ic a nt Ac c o u nt ing P o l ic ies 1 2~ 3 0 5 . P r im a r y S o u r c es o f S ig nif ic a nt Ac c o u nt ing J u dg m ent s , E s t im a t es a nd

As s u m pt io ns U nc er t a int y 3 0 ~ 3 1

6 . S u m m a r y o f M a j o r Ac c o u nt s 3 1 ~ 1 1 5 7 . R el a t ed- P a r t y T r a ns a c t io ns 1 1 6 ~ 1 24 8 . P l edg ed As s et s 1 25 9 . S ig nif ic a nt C o nt ing ent L ia b il it ies a nd U nr ec o g niz ed C o nt r a c t C o m m it m ent s 1 26 ~ 1 3 0 1 0 . S ig nif ic a nt C a t a s t r o ph ic L o s s es 1 3 1 1 1 . S ig nif ic a nt S u b s eq u ent E v ent s 1 3 1 1 2. O t h er s 1 3 1 ~ 1 3 3 1 3 . D is c l o s u r e R eq u ir ed

( A) R el a t ed inf o r m a t io n o n s ig nif ic a nt t r a ns a c t io ns 1 3 4 ~ 1 3 6 ( B ) R el a t ed inf o r m a t io n o n inv es t ee c o m pa nies 1 3 6 ( C ) R el a t ed inf o r m a t io n o n inv es t m ent s in M a inl a nd C h ina 1 3 7 ~ 1 3 8

1 4 . S eg m ent I nf o r m a t io n 1 3 8 ~ 1 3 9

Independent Auditors’ Report

The Board of Directors CTBC Bank Co., Ltd. We have audited the accompanying consolidated balance sheets of CTBC Bank Co., Ltd. and its subsidiaries as of December 31, 2015 and 2014, and related consolidated comprehensive income statements, changes in consolidated stockholders’ equity, and consolidated cash flows for the year ended December 31, 2015 and 2014. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the Rules Governing Auditing and Certification of Financial Statements of Financial Institutions by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements mentioned above present fairly, in all material respects, the consolidated financial position of CTBC Bank Co., Ltd. and its subsidiaries as of December 31, 2015 and 2014, along with its consolidated financial performance and consolidated cash flow for the year ended December 31, 2015 and 2014, in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks, the Regulations Governing the Preparation of Financial Reports by Securities Firms, the Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, International Financial Reporting Standards (IFRSs), International Accounting Standards (IAS), interpretations and pronouncements as accepted by Financial Supervisory Commission. As Stated in Note 12(D), CTBC Bank Co., Ltd. merged with CTBC Insurance Brokers Co., Ltd. on November 30, 2015; the accounting treatment was based on IFRS Q&A and interpretations issued by the Accounting Research and Development Foundation, the merger could quality as reorganization. In accordance with interpretation, when CTBC Bank Co., Ltd. prepared comparative financial statements, the financial statements of CTBC Bank Co., Ltd. were retroactively restated to reflect the merger assuming both entities had merged on January 1, 2014. The structured notes cases as stated in Note 9(D) are still under investigation by the judiciary, and the results remain uncertain. Individual financial statements of CTBC Bank Co., Ltd. were additionally prepared, and we have expressed a modified unqualified opinion on it for user reference. Taipei, Taiwan, R.O.C. March 29, 2016

Notice to Readers The accompanying consolidated financial reports are intended only to present the financial position, financial performance and cash flows in accordance with IFRSs accepted by the Financial Supervisory Commission and not those of any other jurisdictions. The standards, procedures, and practices to audit such financial reports are those generally accepted and applied in the Republic of China. It should be noted that the independent auditors’ report and the accompanying consolidated financial reports were originally prepared in Chinese. As information loss underlies the nature of language transition, when conflicts or ambiguities arise in interpretations between the two versions, the Chinese version shall prevail.

4

CTB

C B

AN

K C

O.,

LTD

. AN

D S

UBS

IDIA

RIE

S C

ON

SOLI

DA

TED

BA

LAN

CE

SHEE

TS

Dec

embe

r 31

, 201

5 an

d 20

14

(Exp

ress

ed In

Tho

usan

ds o

f New

Tai

wan

Dol

lars

)

The

acc

ompa

nyin

g no

tes a

re a

n in

tegr

al p

art o

f the

con

solid

ated

fina

ncia

l rep

orts

. 4

D

ecem

ber

31, 2

015

(R

etro

activ

ely

Res

tate

d)

Dec

embe

r 31

, 201

4 A

SSE

TS

A

mou

nt

％

Am

ount

％

C

ash

and

cash

equ

ival

ents

(Not

e 4

and

6(A

))

$

81

,203

,890

2

109,

030,

159

3

D

ue fr

om C

entra

l Ban

k an

d ca

ll lo

ans t

o ba

nk (N

ote

6(B

) and

8)

402,

006,

003

11

27

4,29

2,40

2

9

Fina

ncia

l ass

ets

mea

sure

d at

fair

valu

e th

roug

h pr

ofit

or lo

ss (

Not

e 4,

6(C

) an

d (T

), an

d 7)

14

0,60

2,12

3

4

10

8,40

0,25

4

3

A

vaila

ble-

for-

sale

fina

ncia

l ass

ets－

net (

Not

e 4,

6(D

) and

(T),

8, a

nd 9

(A))

45

5,70

8,30

0

13

550,

798,

180

17

D

eriv

ativ

e fin

anci

al a

sset

s－he

dgin

g (N

ote

4 an

d 6(

E))

107,

526

-

1,49

9,48

6

-

Secu

ritie

s pur

chas

ed u

nder

reve

rse

repu

rcha

se a

gree

men

ts (N

ote

4 an

d 6(

F))

-

-

2,

774,

393

-

R

ecei

vabl

es－

net (

Not

e 4,

6(G

) and

(J),

7, a

nd 8

)

14

6,67

4,65

4

4

17

6,29

8,46

3

6

Cur

rent

inco

me

taxe

s ass

ets (

Not

e 4)

90

0,26

9

-

94

6,04

9

-

Ass

ets h

eld

for s

ale-

net (

Not

e 4

and

6(H

))

-

-

6,

323,

343

-

Lo

ans－

net (

Not

e 4,

6(I

) and

(J),

and

7)

2,01

1,47

4,30

9

57

1,82

0,19

6,15

4

56

Hel

d-to

-mat

urity

fina

ncia

l ass

ets－

net (

Not

e 4,

6(K

) and

(T),

and

8)

147,

667,

106

4

71,1

54,3

27

2

In

vest

men

t und

er e

quity

met

hod－

net (

Not

e 4

and

6(M

))

2,22

0,42

5

-

2,

010,

966

-

O

ther

fina

ncia

l ass

ets－

net (

Not

e 4,

6(J

) and

(N),

and

8)

17,6

43,3

09

1

20,7

25,5

75

1

Pr

emis

es a

nd e

quip

men

t－ne

t (N

ote

4 an

d 6(

O))

49

,743

,813

2

42

,828

,737

1

Inta

ngib

le a

sset

s－ne

t (N

ote

4 an

d 6(

P))

14,7

88,6

51

1

14,6

00,7

63

1

D

efer

red

inco

me

tax

asse

ts－

net (

Not

e 4)

8,

829,

447

-

9,18

1,99

0

-

Oth

er a

sset

s－ne

t (N

ote

4 an

d 6(

Q))

39

,647

,893

1

26

,551

,301

1

T

OT

AL

ASS

ET

S $

3,5

19,2

17,7

18

100

3,

237,

612,

542

10

0

Dec

embe

r 31

, 201

5

(Ret

roac

tivel

y R

esta

ted)

D

ecem

ber

31, 2

014

LIA

BIL

ITIE

S A

ND

EQ

UIT

Y

A

mou

nt

%

Am

ount

%

L

iabi

litie

s:

D

epos

its fr

om C

entra

l Ban

k an

d ot

her b

anks

(Not

e 6(

R))

$

45,

634,

274

1

49

,934

,428

2

Due

to C

entra

l Ban

k an

d ot

her b

anks

(Not

e 6(

S))

19,7

35,0

29

1

54

,087

,143

2

Fina

ncia

l lia

bilit

ies

mea

sure

d at

fair

valu

e th

roug

h pr

ofit

or lo

ss (N

ote

4,

6(C

) and

7)

127,

592,

578

4

92

,816

,247

3

D

eriv

ativ

e fin

anci

al li

abili

ties－

hedg

ing

(Not

e 4

and

6(E)

)

44

1,42

8

-

916,

322

-

Se

curit

ies

sold

und

er re

purc

hase

agr

eem

ents

(Not

e 4

and

6(T)

)

50

,648

,083

1

60,2

30,7

76

2

Pa

yabl

es (N

ote

6(U

) and

7)

60,1

03,4

77

2

76

,956

,875

2

Cur

rent

inco

me

tax

liabi

litie

s (N

ote

4)

2,98

1,28

0

-

3,39

7,37

3

-

Dep

osits

and

rem

ittan

ces (

Not

e 6(

V) a

nd 7

)

2,

734,

383,

611

78

2,42

1,89

8,97

0

75

Fina

ncia

l deb

entu

res (

Not

e 6(

C),

(E) a

nd (W

))

81,2

70,5

73

2

98

,457

,298

3

Oth

er fi

nanc

ial l

iabi

litie

s (N

ote

6(X

))

151,

058,

510

4

16

7,09

7,64

4

5

Prov

isio

ns (N

ote

4, 6

(Y) a

nd (A

A))

6,

033,

425

-

5,

501,

723

-

D

efer

red

tax

liabi

litie

s (N

ote

4)

469,

291

-

88

7,13

4

-

Oth

er li

abili

ties (

Not

e 6(

Z))

5,37

4,24

6

-

6,02

0,01

6

-

Tot

al L

iabi

litie

s

3,

285,

725,

805

93

3,03

8,20

1,94

9

94

Stoc

khol

ders

’ Equ

ity:

C

apita

l sto

ck:

Com

mon

sto

ck (N

ote

6(A

D))

10

5,72

9,27

9

3

91,0

92,7

75

3

C

apita

l sur

plus

(Not

e 6(

AD

)):

Cap

ital p

rem

ium

26

,911

,545

1

25,0

00,5

68

1

O

ther

s

1,

181,

491

-

1,

181,

491

-

R

etai

ned

earn

ings

:

Le

gal r

eser

ve

54,6

48,9

00

2

44

,370

,246

1

Spec

ial r

eser

ve

14,4

24,2

33

-

4,

814,

487

-

U

ndis

tribu

ted

earn

ings

(Not

e 6(

AD

))

31,3

81,9

87

1

34

,001

,789

1

Oth

er e

quity

inte

rest

(Not

e 6(

AD

))

(866

,509

)

-

(3,8

48,7

40)

-

Eq

uity

attr

ibut

able

to fo

rmer

ow

ner o

f bus

ines

s com

bina

tion

unde

r co

mm

on c

ontro

l

-

-

2,71

7,29

6

-

N

on-c

ontro

lling

inte

rest

80

,987

-

80,6

81

-

T

otal

Equ

ity

233,

491,

913

7

19

9,41

0,59

3

6

TO

TA

L L

IAB

ILIT

IES

AN

D E

QU

ITY

$

3,

519,

217,

718

100

3,23

7,61

2,54

2

10

0

5

CTBC BANK CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMP REH ENSIV E INCOME

For The Y ear Ended December 31, 2015 And 2014 (Ex p res s ed In Thou s ands of New Taiw an Dol l ars )

The accomp anying notes are an integral p art of the cons ol idated f inancial rep orts . 5

For the year ended December 31

2015

(Retroactiv el y Res tated)

2014

Amou nt ％ Amou nt ％ Change ％

Interes t income (Note 6(AH )) $ 6 3 , 9 3 3 , 7 4 1 6 9 5 8 , 8 3 3 , 1 7 3 6 4 9

L es s : I nt er es t expens es ( N o t e 6 ( AH ) ) ( 20 , 8 5 9 , 9 4 5 ) ( 23 ) ( 20 , 5 6 6 , 8 8 9 ) ( 22) 1

Net interes t income (Note 6(AH )) 4 3 , 0 7 3 , 7 9 6 4 6 3 8 , 26 6 , 28 4 4 2 1 3

Net income ex cep t interes t S er v ic e f ee a nd c o m m is s io n inc o m e ( N o t e 6 ( AI ) ) 3 4 , 6 9 4 , 8 8 6 3 8 3 1 , 7 1 7 , 7 3 8 3 5 9

G a ins o n f ina nc ia l a s s et s o r l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ( N o t e

6 ( AJ ) )

1 1 , 20 7 , 5 4 3 1 2 1 1 , 29 2, 1 8 8 1 2 ( 1 )

R ea l iz ed g a ins o n a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s 1 , 3 3 9 , 9 3 1 2 1 , 6 5 8 , 1 7 9 2 ( 1 9 )

R ea l iz ed g a in o n h el d- t o - m a t u r it y f ina nc ia l a s s et s 4 0 9 - 6 7 , 0 7 3 - ( 9 9 )

F o r eig n exc h a ng e l o s s es ( 4 , 3 8 7 , 6 0 4 ) ( 5 ) ( 4 , 4 27 , 1 3 2) ( 5 ) 1 I m pa ir m ent l o s s ( 6 7 , 3 9 1 ) - ( 28 , 5 6 8 ) - ( 1 3 6 )

P r o po r t io na t e s h a r e o f g a ins ( l o s s es ) f r o m a s s o c ia t es o r j o int v ent u r es u nder eq u it y

m et h o d ( N o t e 6 ( M ) )

8 9 , 1 6 6 - ( 1 7 , 1 9 2) - 6 1 9

O t h er net no n- int er es t inc o m e 2, 0 4 0 , 7 1 2 2 8 3 8 , 5 8 8 1 1 4 3

G a ins o n dis po s a l o f pr o per t y － a s s et s a s h el d f o r s a l e ( N o t e 1 3 ( A) ) 1 0 , 229 , 8 0 0 1 1 - - 1 0 0

L o s s es o n r et ir em ent o f a s s et s ( 3 , 0 7 1 , 1 3 1 ) ( 3 ) ( 1 0 , 3 9 8 ) - ( 29 , 4 3 6 ) G a in f r o m a b a r g a in pu r c h a s e ( N o t e 1 2( C ) ) - - 1 4 , 8 1 4 , 1 5 4 1 6 ( 1 0 0 )

P u b l ic - w e l f a r e l o t t er y pa y m ent ( 2, 7 0 0 , 0 0 0 ) ( 3 ) ( 2, 7 0 0 , 0 0 0 ) ( 3 ) -

Net Rev enu e 9 2, 4 5 0 , 1 1 7 1 0 0 9 1 , 4 7 0 , 9 1 4 1 0 0 1

P rov is ions f or bad debt ex p ens es and gu arantee res erv e (Note 6(J )) ( 1 , 1 5 8 , 3 3 7 ) ( 1 ) ( 3 , 0 3 7 , 9 7 7 ) ( 4 ) ( 6 2)

Op erating ex p ens es : E m pl o y ee b enef it s expens es ( N o t e 6 ( AK ) ) ( 26 , 3 5 9 , 0 3 7 ) ( 29 ) ( 24 , 4 1 0 , 6 9 7 ) ( 27 ) 8 D epr ec ia t io n a nd a m o r t iz a t io n expens es ( N o t e 6 ( AL ) ) ( 2, 9 7 9 , 21 5 ) ( 3 ) ( 2, 0 9 0 , 7 21 ) ( 2) 4 2 O t h er g ener a l a nd a dm inis t r a t iv e expens es ( N o t e 6 ( AN ) ) ( 22, 1 6 4 , 1 27 ) ( 24 ) ( 1 9 , 3 3 2, 0 3 4 ) ( 21 ) 1 5

Total op erating ex p ens es ( 5 1 , 5 0 2, 3 7 9 ) ( 5 6 ) ( 4 5 , 8 3 3 , 4 5 2) ( 5 0 ) 1 2

Net Income Bef ore Tax f rom Continu ing Op erations 3 9 , 7 8 9 , 4 0 1 4 3 4 2, 5 9 9 , 4 8 5 4 6 ( 7 )

Income tax ex p ens es (Note 6(AB)) ( 5 , 5 4 4 , 8 7 2) ( 6 ) ( 5 , 7 25 , 0 3 6 ) ( 6 ) 3

Net Income 3 4 , 24 4 , 5 29 3 7 3 6 , 8 7 4 , 4 4 9 4 0 ( 7 )

Other comp rehens iv e income:

Items that w il l not be recl as s if ied s u bs eq u entl y to p rof it or l os s

R em ea s u r em ent l o s s es r el a t ed t o def ined b enef it pl a ns ( 6 3 2, 4 9 7 ) - ( 3 1 1 , 3 7 9 ) - ( 1 0 3 ) C h a ng es in des ig na t ed a s f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it

o r l o s s a t t r ib u t a b l e t o c r edit r is k

1 , 1 5 0 , 7 29 1 4 6 4 , 0 1 2 1 1 4 8

P r o po r t io na t e s h a r e o f o t h er c o m pr eh ens iv e inc o m e f r o m a s s o c ia t es o r j o int v ent u r es u nder t h e eq u it y m et h o d- it em s t h a t a r e o r no t b e r ec l a s s if ied t o pr o f it

o r l o s s

( 3 , 0 7 5 ) - ( 6 6 2) - ( 3 6 5 )

I nc o m e t a x r el a t ed t o it em s t h a t w il l no t b e r ec l a s s if ied t o pr o f it o r l o s s 1 1 0 , 3 9 3 - 5 9 , 4 5 6 - 8 6

Su btotal 6 25 , 5 5 0 1 21 1 , 4 27 1 1 9 6

Items that are or may be recl as s if ied s u bs eq u entl y to p rof it or l os s

E xc h a ng e dif f er enc es o f o v er s ea s s u b s idia r ies ’ f ina nc ia l r epo r t s t r a ns l a t io n 1 , 9 1 4 , 0 1 4 2 4 5 9 , 7 8 2 1 3 1 6

U nr ea l iz ed v a l u a t io n l o s s es o n a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s ( 3 0 4 , 7 20 ) - ( 4 7 1 , 26 4 ) ( 1 ) 3 5

P r o po r t io na t e s h a r e o f o t h er c o m pr eh ens iv e inc o m e f r o m a s s o c ia t es o r j o int

v ent u r es u nder t h e eq u it y m et h o d- it em s t h a t a r e o r m a y b e r ec l a s s if ied t o

pr o f it o r l o s s

4 1 , 3 6 7 - 4 3 , 5 9 0 - ( 5 )

I nc o m e t a x r el a t ed t o it em s t h a t a r e o r m a y b e r ec l a s s if ied t o pr o f it o r l o s s 1 7 4 , 3 0 8 - 26 8 , 3 3 8 - ( 3 5 )

Su btotal 1 , 8 24 , 9 6 9 2 3 0 0 , 4 4 6 - 5 0 7

Other comp rehens iv e income (net amou nt af ter tax ) 2, 4 5 0 , 5 1 9 3 5 1 1 , 8 7 3 1 3 7 9

Total Comp rehens iv e Income $ 36,695,048 40 37,386,322 41 ( 2)

Net Income Attribu tabl e to:

P a r ent c o m pa ny $ 3 1 , 9 0 6 , 8 1 6 3 4 3 4 , 27 4 , 7 8 0 3 7 ( 7 )

E q u it y a t t r ib u t a b l e t o f o r m er o w ner o f b u s ines s c o m b ina t io n u nder c o m m o n c o nt r o l 2, 3 3 3 , 4 5 2 3 2, 6 0 5 , 9 7 0 3 ( 1 0 )

N o n- c o nt r o l l ing int er es t 4 , 26 1 - ( 6 , 3 0 1 ) - 1 6 8

$ 34,244,529 37 36,874,449 40

Comp rehens iv e Income Attribu tabl e to:

P a r ent c o m pa ny $ 3 4 , 3 6 3 , 8 3 3 3 7 3 4 , 7 6 1 , 8 5 4 3 8 ( 1 )

E q u it y a t t r ib u t a b l e t o f o r m er o w ner o f b u s ines s c o m b ina t io n u nder c o m m o n c o nt r o l 2, 3 3 0 , 9 0 9 3 2, 6 1 4 , 7 5 1 3 ( 1 1 )

N o n- c o nt r o l l ing int er es t 3 0 6 - 9 , 7 1 7 - ( 9 7 )

$ 36,695,048 40 37,386,322 41

Earnings p er s hare (u nit: NT dol l ars ) (Note 6(AG )) $ 3.24 3.58

6

The

acc

ompa

nyin

g no

tes a

re a

n in

tegr

al p

art o

f the

con

solid

ated

fina

ncia

l rep

orts

. 6

CTB

C B

AN

K C

O.,

LTD

. AN

D S

UBS

IDIA

RIE

S C

ON

SOLI

DA

TED

STA

TEM

ENTS

OF

CH

AN

GES

IN S

TOC

KH

OLD

ERS’

EQ

UIT

Y

For

the

Yea

r En

ded

Dec

embe

r 31

, 201

5 A

nd 2

014

(Ret

roac

tivel

y R

esta

ted

for

the

Yea

r En

ded

Dec

embe

r 31

, 201

4)

(Exp

ress

ed In

Tho

usan

ds o

f New

Tai

wan

Dol

lars

)

Stoc

khol

ders

' Equ

ity -

Pare

nt c

ompa

ny

Oth

er e

quity

inte

rest

C

apita

l sto

ck

R

etai

ned

earn

ings

Exc

hang

e di

ffer

ence

s of

ove

rsea

s su

bsid

iari

es’

finan

cial

re

port

s tr

ansl

atio

n

U

nrea

lized

(lo

sses

) gai

ns o

n av

aila

ble-

for-

sal

e fin

anci

al a

sset

s

Cha

nges

in

desig

nate

d as

fin

anci

al

liabi

litie

s m

easu

red

at fa

ir

valu

e th

roug

h pr

ofit

or lo

ss

attr

ibut

able

to

cred

it ri

sk

Equ

ity

attr

ibut

able

to

form

er o

wne

r of

bu

sine

ss

com

bina

tions

un

der

com

mon

co

ntro

l

C

omm

on s

tock

Cap

ital

surp

lus

L

egal

re

serv

e

Spec

ial

rese

rve

U

ndis

trib

uted

ea

rnin

gs

Stoc

khol

ders

' eq

uity

- pa

rent

com

pany

N

on-c

ontr

ollin

g in

tere

st

T

otal

equ

ity

Bal

ance

—Ja

nuar

y 1,

201

4

$

7

8,62

2,89

7

17,1

82,0

59

39,6

62,5

92

299,

935

15

,692

,181

(4

,119

,096

) (4

89,8

06)

-

14

6,85

0,76

2

-

70,9

64

146,

921,

726

Ret

rosp

ectiv

e ad

just

men

t of e

quity

attr

ibut

able

to

form

er o

wne

r due

to re

orga

niza

tion

of e

ntiti

es

unde

r com

mon

con

trol

-

-

-

-

-

-

-

-

-

2,

330,

437

-

2,

330,

437

Equ

ity a

t beg

inni

ng o

f per

iod

afte

r ad

just

men

ts

78,6

22,8

97

17,1

82,0

59

39,6

62,5

92

299,

935

15

,692

,181

(4

,119

,096

) (4

89,8

06)

-

14

6,85

0,76

2

2,33

0,43

7

70,9

64

149,

252,

163

N

et in

com

e

-

-

-

-

34,2

62,1

78

-

-

-

34,2

62,1

78

2,60

5,97

0

6,30

1

36,8

74,4

49

O

ther

com

preh

ensiv

e in

com

e

-

-

-

-

(260

,486

)

581,

980

(2

85,8

30)

46

4,01

2

499,

676

8,

781

3,

416

51

1,87

3

Tota

l com

preh

ensiv

e In

com

e

-

-

-

-

34,0

01,6

92

581,

980

(2

85,8

30)

46

4,01

2

34,7

61,8

54

2,61

4,75

1

9,71

7

37,3

86,3

22

Earn

ings

app

ropr

iatio

n an

d di

strib

utio

n (N

ote)

Le

gal r

eser

ve a

ppro

pria

ted

-

-

4,

707,

654

-

(4

,707

,654

)

-

-

-

-

-

-

- Sp

ecia

l res

erve

app

ropr

iate

d

-

-

-

4,51

4,55

2

(4,5

14,5

52)

-

-

-

-

-

-

-

Cas

h di

vide

nds -

com

mon

sha

re

-

-

-

-

-

-

-

-

-

(2

,227

,892

)

-

(2,2

27,8

92)

Stoc

k di

vide

nds -

com

mon

shar

e

6,46

9,87

8

-

-

-

(6,4

69,8

78)

-

-

-

-

-

-

-

Cap

ital i

ncre

ase

by c

ash

6,

000,

000

9,

000,

000

-

-

-

-

-

-

15

,000

,000

-

-

15

,000

,000

B

alan

ce—

Dec

embe

r 31,

201

4

91,0

92,7

75

26,1

82,0

59

44,3

70,2

46

4,81

4,48

7

34,0

01,7

89

(3,5

37,1

16)

(7

75,6

36)

46

4,01

2

196,

612,

616

2,

717,

296

80

,681

19

9,41

0,59

3

Net

inco

me

-

-

-

-

31

,906

,816

-

-

-

31

,906

,816

2,

333,

452

4,

261

34

,244

,529

Oth

er c

ompr

ehen

sive

inco

me

-

-

-

-

(5

25,2

14)

1,

817,

415

14

,087

1,

150,

729

2,

457,

017

(2,5

43)

(3

,955

)

2,45

0,51

9

Tota

l com

preh

ensiv

e In

com

e

-

-

-

-

31,3

81,6

02

1,81

7,41

5

14,0

87

1,15

0,72

9

34,3

63,8

33

2,33

0,90

9

306

36

,695

,048

Ea

rnin

gs a

ppro

pria

tion

and

distr

ibut

ion

Lega

l res

erve

app

ropr

iate

d

-

-

10,2

78,6

54

-

(10,

278,

654)

-

-

-

-

-

-

-

Spec

ial r

eser

ve a

ppro

pria

ted

-

-

-

10

,369

,908

(1

0,36

9,90

8)

-

-

-

-

-

-

- C

ash

divi

dend

s - c

omm

on s

hare

-

-

-

-

-

-

-

-

-

(2,6

13,7

28)

-

(2

,613

,728

) St

ock

divi

dend

s - c

omm

on sh

are

14

,113

,004

-

-

-

(1

4,11

3,00

4)

-

-

-

-

-

-

- R

ever

sal f

rom

spec

ial r

eser

ve

-

-

-

(7

60,1

62)

76

0,16

2

-

-

-

-

-

-

- R

eorg

aniz

atio

n

523,

500

1,

910,

977

-

-

-

-

-

-

2,

434,

477

(2

,434

,477

)

-

- B

alan

ce—

Dec

embe

r 31,

201

5

$

105,

729,

279

28

,093

,036

54

,648

,900

14

,424

,233

31

,381

,987

(1,7

19,7

01)

(7

61,5

49)

1,61

4,74

123

3,41

0,92

6-

80

,987

233,

491,

913

Not

e: F

or th

e ye

ar e

nded

Dec

embe

r 31,

201

4, e

mpl

oyee

bon

uses

of $

4,97

3 w

as d

educ

ted

from

the

cons

olid

ated

stat

emen

ts of

com

preh

ensi

ve in

com

e.

7

7

CTBC BANK CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW S

For the Y ear Ended December 31, 2015 And 2014 (Ex p res s ed In Thou s ands of New Taiw an Dol l ars )


2015


2014 Cas h Fl ow s f rom Op erating Activ ities : Net Income Bef ore Tax $ 3 9 , 7 8 9 , 4 0 1 4 2, 5 9 9 , 4 8 5 Adj u s tments : I nc o m e a nd expens e it em s D epr ec ia t io n expens es 1 , 9 28 , 1 5 4 1 , 3 4 0 , 3 6 3 Am o r t iz a t io n expens es 1 , 0 5 1 , 0 6 1 7 5 0 , 3 5 8 P r o v is io n f o r b a d deb t expens es 1 , 1 5 8 , 3 3 7 3 , 0 3 7 , 9 7 7 N et g a ins o n f ina nc ia l a s s et s o r l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it ( 4 4 3 , 8 1 0 ) ( 5 , 4 3 8 , 3 8 5 ) I nt er es t expens es 20 , 8 5 9 , 9 4 5 20 , 5 6 6 , 8 8 9 I nt er es t inc o m e ( 6 3 , 9 3 3 , 7 4 1 ) ( 5 8 , 8 3 3 , 1 7 3 ) D iv idend inc o m e ( 5 0 3 , 4 7 1 ) ( 3 6 1 , 8 5 8 ) N et c h a ng es in g u a r a nt ee r es er v e ( 1 7 , 8 7 9 ) ( 5 , 6 4 5 ) N et c h a ng es in o t h er pr o v is io ns ( 1 1 , 0 7 0 ) ( 5 7 , 5 4 3 ) L o s s es o n dis po s a l o f f o r ec l o s ed pr o per t ies 3 1 4 1 , 6 7 3 P r o po r t io na t e s h a r e o f ( g a ins ) l o s s es f r o m a s s o c ia t es o r j o int v ent u r es u nder

t h e eq u it y m et h o d ( 8 9 , 1 6 6 ) 1 7 , 1 9 2

L o s s es o n dis po s a l a nd r et ir em ent o f pr em is es a nd eq u ipm ent 2, 3 5 8 , 23 1 4 , 6 5 3 L o s s es o n dis po s a l o f int a ng ib l e a s s et s - 7 3 G a ins o n dis po s a l o f a s s et s h el d f o r s a l e ( 1 0 , 229 , 8 0 0 ) - I m pa ir m ent l o s s o n ( g a ins o n r ev er s a l o f ) f ina nc ia l a s s et s 7 0 , 7 0 1 ( 8 , 3 5 5 ) ( G a ins o n r ev er s a l o f ) im pa ir m ent l o s s o n no n- f ina nc ia l a s s et s ( 3 , 3 1 0 ) 3 6 , 9 23 G a in f r o m a b a r g a in pu r c h a s e - ( 1 4 , 8 1 4 , 1 5 4 )

O t h er a dj u s t m ent s 1 , 0 0 4 , 6 22 ( 3 22, 9 6 2) S u b t o t a l o f inc o m e a nd expens e it em s w it h no ef f ec t o n c a s h f l o w s ( 4 6 , 8 0 0 , 8 8 2) ( 5 4 , 0 8 5 , 9 7 4 )

C h a ng es in O per a t ing As s et s a nd L ia b il it ies : N et C h a ng es in O per a t ing As s et s : ( I nc r ea s e) dec r ea s e in du e f r o m C ent r a l B a nk a nd c a l l l o a ns t o b a nk ( 3 0 , 4 7 6 , 8 8 5 ) 1 , 25 3 , 4 5 0 I nc r ea s e in f ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ( 3 4 , 1 5 1 , 6 7 9 ) ( 1 , 0 5 1 , 6 6 1 ) D ec r ea s e ( inc r ea s e) in h edg ing der iv a t iv e f ina nc ia l a s s et s 1 , 3 9 1 , 9 6 0 ( 5 8 9 , 3 7 3 ) D ec r ea s e ( inc r ea s e) in r ec eiv a b l es 28 , 0 3 3 , 4 3 8 ( 6 , 3 3 6 , 7 3 0 ) I nc r ea s e in l o a ns ( 1 9 2, 7 8 4 , 6 5 0 ) ( 9 8 , 9 5 3 , 3 0 6 ) D ec r ea s e ( inc r ea s e) in a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s 9 4 , 9 8 9 , 27 0 ( 6 2, 5 4 6 , 9 9 9 ) I nc r ea s e in h el d- t o - m a t u r it y f ina nc ia l a s s et s ( 7 6 , 5 1 2, 7 7 9 ) ( 9 , 4 21 , 8 8 3 ) D ec r ea s e ( inc r ea s e) in o t h er f ina nc ia l a s s et s 3 , 3 9 1 , 4 25 ( 1 24 , 9 8 4 ) N et C h a ng es in O per a t ing As s et s ( 20 6 , 1 1 9 , 9 0 0 ) ( 1 7 7 , 7 7 1 , 4 8 6 ) N et C h a ng es in O per a t ing L ia b il it ies : ( D ec r ea s e) inc r ea s e in depo s it s f r o m C ent r a l B a nk a nd o t h er b a nk s ( 4 , 3 0 0 , 1 5 4 ) 9 24 , 8 7 0 I nc r ea s e in f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s 26 , 3 5 3 , 21 5 29 , 9 9 6 , 1 9 9 ( D ec r ea s e) inc r ea s e in h edg ing der iv a t iv e f ina nc ia l l ia b il it ies ( 4 7 4 , 8 9 4 ) 6 6 1 , 21 0 ( D ec r ea s e) inc r ea s e in pa y a b l es ( 1 1 , 3 5 4 , 0 0 2) 6 , 5 6 6 , 6 21 I nc r ea s e in depo s it s a nd r em it t a nc es 3 1 2, 4 8 4 , 6 4 1 1 9 3 , 7 0 3 , 8 1 5 ( D ec r ea s e) inc r ea s e in o t h er f ina nc ia l l ia b il it ies ( 1 7 , 0 0 4 , 8 5 3 ) 7 , 1 21 , 21 5 I nc r ea s e in em pl o y ee b enef it s pr o v is io n 5 1 1 , 7 5 6 20 7 , 5 3 8 N et C h a ng es in O per a t ing L ia b il it ies 3 0 6 , 21 5 , 7 0 9 23 9 , 1 8 1 , 4 6 8 N et C h a ng es in O per a t ing As s et s a nd L ia b il it ies 1 0 0 , 0 9 5 , 8 0 9 6 1 , 4 0 9 , 9 8 2 S u m o f Adj u s t m ent s 5 3 , 29 4 , 9 27 7 , 3 24 , 0 0 8 C a s h P r o v ided b y O per a t ing Ac t iv it ies 9 3 , 0 8 4 , 3 28 4 9 , 9 23 , 4 9 3 I nt er es t r ec eiv ed 6 4 , 7 6 6 , 27 6 5 8 , 223 , 24 0 D iv idend r ec eiv ed 5 7 2, 1 1 0 4 1 3 , 3 3 7 I nt er es t pa id ( 25 , 8 6 0 , 3 6 3 ) ( 21 , 27 1 , 23 1 ) I nc o m e t a x pa id ( 5 , 5 5 7 , 1 8 6 ) ( 4 , 29 2, 3 5 0 ) Net Cas h P rov ided by Op erating Activ ities 1 27 , 0 0 5 , 1 6 5 8 2, 9 9 6 , 4 8 9

7-1

CTBC BANK CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW S(CONT’D)


The accomp anying notes are an integral p art of the cons ol idated f inancial rep orts . 7 - 1


2015


2014 Cas h Fl ow s f rom Inv es ting Activ ities : P u r c h a s e o f f ina nc ia l a s s et s c a r r ied a t c o s t $ ( 1 9 0 , 1 6 4 ) ( 1 1 4 , 5 6 6 )

D is po s a l o f f ina nc ia l a s s et s c a r r ied a t c o s t - 3 4 5 P r o c eeds f r o m c a pit a l r edu c t io n o f f ina nc ia l a s s et s c a r r ied a t c o s t - 9 2, 0 9 5 P u r c h a s e o f f ina nc ia l a s s et s u nder eq u it y m et h o d ( 3 5 7 , 23 8 ) - D is po s a l o f f ina nc ia l a s s et s u nder eq u it y m et h o d 23 2, 8 3 3 -

P u r c h a s e o f pr em is es a nd eq u ipm ent ( 9 , 3 9 4 , 8 5 3 ) ( 8 , 3 0 0 , 0 4 1 ) D is po s a l o f pr em is es a nd eq u ipm ent 1 , 1 4 9 , 9 6 4 4 8 , 3 4 4 P u r c h a s e o f int a ng ib l e a s s et s ( 1 , 0 3 7 , 3 5 6 ) ( 1 , 4 9 2, 29 6 )

D is po s a l o f int a ng ib l e a s s et s 6 8 , 0 9 4 7 1 6 D is po s a l o f f o r ec l o s ed pr o per t ies 1 2, 1 4 1 7 , 0 7 1

C a s h inf l o w s f r o m b u s ines s c o m b ina t io n - 4 8 , 20 3 , 3 5 3 D ec r ea s e in r ec eiv a b l es 8 1 3 , 8 5 4 5 1 4 , 6 5 5 I nc r ea s e in o t h er a s s et s ( 1 2, 0 7 8 , 5 4 8 ) ( 1 3 , 9 1 6 , 9 9 2) D is po s a l o f a s s et s h el d f o r s a l e 1 3 , 6 4 0 , 1 5 3 - Net Cas h (Us ed in) P rov ided by Inv es ting Activ ities ( 7 , 1 4 1 , 1 20 ) 25 , 0 4 2, 6 8 4 Cas h Fl ow s f rom Financing Activ ities : D ec r ea s e in du e t o C ent r a l B a nk a nd o t h er b a nk s ( 3 4 , 3 5 2, 1 1 4 ) ( 2, 6 1 2, 4 0 7 )

I s s u a nc e o f f ina nc ia l deb ent u r es 1 7 , 0 0 0 , 0 0 0 3 5 , 0 0 0 , 0 0 0 R epa y m ent s o f f ina nc ia l deb ent u r es ( 3 4 , 1 5 7 , 4 20 ) ( 5 , 9 9 6 , 9 9 0 ) D ec r ea s e in s ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s ( 9 , 5 8 2, 6 9 3 ) ( 8 0 7 , 4 1 8 ) I nc r ea s e in f ina nc ia l l ia b il it ies des ig na t ed a s a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ,

u po n init ia l r ec o g nit io n 1 0 , 0 5 7 , 7 3 7 3 2, 7 6 4 , 6 9 4

( D ec r ea s e) inc r ea s e in pa y a b l es ( 4 7 5 , 6 4 7 ) 9 28 , 29 1 D ec r ea s e in o t h er l ia b il it ies ( 6 4 4 , 7 3 9 ) ( 1 , 0 23 , 1 6 8 ) C a s h div idends is s u a nc e ( 2, 6 1 3 , 7 28 ) ( 2, 227 , 8 9 2)

C a pit a l inc r ea s e b y c a s h - 1 5 , 0 0 0 , 0 0 0 Net Cas h (Us ed in) P rov ided by Financing Activ ities ( 5 4 , 7 6 8 , 6 0 4 ) 7 1 , 0 25 , 1 1 0 E f f ec t o f exc h a ng e r a t e c h a ng es o n c a s h a nd c a s h eq u iv a l ent s 1 , 5 4 0 , 6 1 3 ( 1 , 7 3 3 , 21 2) I nc r ea s e in C a s h a nd C a s h E q u iv a l ent s 6 6 , 6 3 6 , 0 5 4 1 7 7 , 3 3 1 , 0 7 1 C a s h a nd C a s h E q u iv a l ent s , a t t h e B eg inning o f t h e P er io d 3 3 8 , 1 3 6 , 3 6 9 1 6 0 , 8 0 5 , 29 8 C a s h a nd C a s h E q u iv a l ent s , a t t h e E nd o f t h e P er io d $ 404,772,423 338,136,369

C o m po nent s o f c a s h a nd c a s h eq u iv a l ent s : C a s h a nd c a s h eq u iv a l ent s r ec o g niz ed in t h e b a l a nc e s h eet $ 8 1 , 20 3 , 8 9 0 1 0 9 , 0 3 0 , 1 5 9 D u e f r o m C ent r a l B a nk a nd c a l l l o a ns t o b a nk w h ic h m eet I AS 7 def init io n o f c a s h

a nd c a s h eq u iv a l ent s 3 23 , 5 6 8 , 5 3 3 226 , 3 3 1 , 8 1 7

S ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s w h ic h m eet I AS 7 def init io n o f c a s h a nd c a s h eq u iv a l ent s

- 2, 7 7 4 , 3 9 3

C a s h a nd C a s h E q u iv a l ent s , a t t h e E nd o f t h e P er io d $ 404,772,423 338,136,369

CTBC BANK CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW S(CONT’D)


The accomp anying notes are an integral p art of the cons ol idated f inancial rep orts . 7 - 1


2015


2014 Cas h Fl ow s f rom Inv es ting Activ ities : P u r c h a s e o f f ina nc ia l a s s et s c a r r ied a t c o s t $ ( 1 9 0 , 1 6 4 ) ( 1 1 4 , 5 6 6 )

D is po s a l o f f ina nc ia l a s s et s c a r r ied a t c o s t - 3 4 5 P r o c eeds f r o m c a pit a l r edu c t io n o f f ina nc ia l a s s et s c a r r ied a t c o s t - 9 2, 0 9 5 P u r c h a s e o f f ina nc ia l a s s et s u nder eq u it y m et h o d ( 3 5 7 , 23 8 ) - D is po s a l o f f ina nc ia l a s s et s u nder eq u it y m et h o d 23 2, 8 3 3 -

P u r c h a s e o f pr em is es a nd eq u ipm ent ( 9 , 3 9 4 , 8 5 3 ) ( 8 , 3 0 0 , 0 4 1 ) D is po s a l o f pr em is es a nd eq u ipm ent 1 , 1 4 9 , 9 6 4 4 8 , 3 4 4 P u r c h a s e o f int a ng ib l e a s s et s ( 1 , 0 3 7 , 3 5 6 ) ( 1 , 4 9 2, 29 6 )

D is po s a l o f int a ng ib l e a s s et s 6 8 , 0 9 4 7 1 6 D is po s a l o f f o r ec l o s ed pr o per t ies 1 2, 1 4 1 7 , 0 7 1

C a s h inf l o w s f r o m b u s ines s c o m b ina t io n - 4 8 , 20 3 , 3 5 3 D ec r ea s e in r ec eiv a b l es 8 1 3 , 8 5 4 5 1 4 , 6 5 5 I nc r ea s e in o t h er a s s et s ( 1 2, 0 7 8 , 5 4 8 ) ( 1 3 , 9 1 6 , 9 9 2) D is po s a l o f a s s et s h el d f o r s a l e 1 3 , 6 4 0 , 1 5 3 - Net Cas h (Us ed in) P rov ided by Inv es ting Activ ities ( 7 , 1 4 1 , 1 20 ) 25 , 0 4 2, 6 8 4 Cas h Fl ow s f rom Financing Activ ities : D ec r ea s e in du e t o C ent r a l B a nk a nd o t h er b a nk s ( 3 4 , 3 5 2, 1 1 4 ) ( 2, 6 1 2, 4 0 7 )

I s s u a nc e o f f ina nc ia l deb ent u r es 1 7 , 0 0 0 , 0 0 0 3 5 , 0 0 0 , 0 0 0 R epa y m ent s o f f ina nc ia l deb ent u r es ( 3 4 , 1 5 7 , 4 20 ) ( 5 , 9 9 6 , 9 9 0 ) D ec r ea s e in s ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s ( 9 , 5 8 2, 6 9 3 ) ( 8 0 7 , 4 1 8 ) I nc r ea s e in f ina nc ia l l ia b il it ies des ig na t ed a s a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ,

u po n init ia l r ec o g nit io n 1 0 , 0 5 7 , 7 3 7 3 2, 7 6 4 , 6 9 4

( D ec r ea s e) inc r ea s e in pa y a b l es ( 4 7 5 , 6 4 7 ) 9 28 , 29 1 D ec r ea s e in o t h er l ia b il it ies ( 6 4 4 , 7 3 9 ) ( 1 , 0 23 , 1 6 8 ) C a s h div idends is s u a nc e ( 2, 6 1 3 , 7 28 ) ( 2, 227 , 8 9 2)

C a pit a l inc r ea s e b y c a s h - 1 5 , 0 0 0 , 0 0 0 Net Cas h (Us ed in) P rov ided by Financing Activ ities ( 5 4 , 7 6 8 , 6 0 4 ) 7 1 , 0 25 , 1 1 0 E f f ec t o f exc h a ng e r a t e c h a ng es o n c a s h a nd c a s h eq u iv a l ent s 1 , 5 4 0 , 6 1 3 ( 1 , 7 3 3 , 21 2) I nc r ea s e in C a s h a nd C a s h E q u iv a l ent s 6 6 , 6 3 6 , 0 5 4 1 7 7 , 3 3 1 , 0 7 1 C a s h a nd C a s h E q u iv a l ent s , a t t h e B eg inning o f t h e P er io d 3 3 8 , 1 3 6 , 3 6 9 1 6 0 , 8 0 5 , 29 8 C a s h a nd C a s h E q u iv a l ent s , a t t h e E nd o f t h e P er io d $ 404,772,423 338,136,369

C o m po nent s o f c a s h a nd c a s h eq u iv a l ent s : C a s h a nd c a s h eq u iv a l ent s r ec o g niz ed in t h e b a l a nc e s h eet $ 8 1 , 20 3 , 8 9 0 1 0 9 , 0 3 0 , 1 5 9 D u e f r o m C ent r a l B a nk a nd c a l l l o a ns t o b a nk w h ic h m eet I AS 7 def init io n o f c a s h

a nd c a s h eq u iv a l ent s 3 23 , 5 6 8 , 5 3 3 226 , 3 3 1 , 8 1 7

S ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s w h ic h m eet I AS 7 def init io n o f c a s h a nd c a s h eq u iv a l ent s

- 2, 7 7 4 , 3 9 3

C a s h a nd C a s h E q u iv a l ent s , a t t h e E nd o f t h e P er io d $ 404,772,423 338,136,369

8

8

CTBC BANK CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL REP ORTS

December 31, 2015 and 2014 (Ex p res s ed in Thou s ands of New Taiw an Dol l ars , Unl es s Otherw is e Stated)

1. BASIS OF P RESENTATION

C T B C B a nk C o . , L t d. ( t h e “ B a nk ” ) w a s o r ig ina l l y inc o r po r a t ed in M a r c h 1 9 6 6 a s “ C h ina S ec u r it ies I nv es t m ent C o r po r a t io n. ” I n D ec em b er 1 9 7 0 , t h e B a nk c h a ng ed it s o r g a niz a t io n a nd w a s r ena m ed C h ina T r u s t C o . , L t d. T w ent y - o ne y ea r s l a t er , o n J u l y 2, 1 9 9 2, it w a s a ppr o v ed t o c o ndu c t c o m m er c ia l b a nk ing b u s ines s a nd c h a ng ed it s na m e t o C T B C B a nk C o . , L t d. I n o r der t o r es t r u c t u r e o v er a l l r es o u r c es , l o w er c o s t s , expa nd t h e b u s ines s s c o pe, enh a nc e c o m pet it iv enes s , a nd im pr o v e t h e q u a l it y o f f ina nc ia l s er v ic es a nd o per a t ing ef f ic ienc y , o n S ept em b er 3 0 , 20 0 3 , t h e B a nk ’ s b o a r d o f dir ec t o r s r es o l v ed t o a c q u ir e G r a nd C o m m er c ia l B a nk , a w h o l l y o w ned s u b s idia r y o f C T B C F ina nc ia l H o l ding C o . , L t d. , a nd t o m er g e w it h it , w it h t h e B a nk a s t h e s u r v iv ing ent it y . T h e a c q u is it io n da t e o f r ec o r d w a s D ec em b er 1 , 20 0 3 . O n Au g u s t 1 , 1 9 9 1 , G r a nd C o m m er c ia l B a nk w a s a ppr o v ed t o c o ndu c t c o m m er c ia l b a nk ing b u s ines s , a nd it b eg a n o per a t io ns o n D ec em b er 3 0 , 1 9 9 1 . As o f N o v em b er 3 0 , 20 0 3 , G r a nd C o m m er c ia l B a nk h a d a b u s ines s depa r t m ent , a t r u s t depa r t m ent , a do m es t ic b a nk ing u nit , a n o f f s h o r e b a nk ing u nit , a nd 4 2 do m es t ic b r a nc h es . I n o r der t o dev el o p t h e b u s ines s u nit s , enh a nc e c o m pet it iv enes s , a nd pr o v ide c u s t o m er s w it h m o r e c o nv enient a nd v a r ied f ina nc ia l s er v ic es , t h e B a nk a s s u m ed t h e o u t s t a nding a s s et s , l ia b il it ies a nd o per a t io ns o f F eng s h a n C r edit C o o per a t iv e ( “ F S C C ” ) a nd E nt er pr is e B a nk o f H u a l ien ( “ E B H ” ) o n O c t o b er 1 , 20 0 4 , a nd S ept em b er 8 , 20 0 7 , r es pec t iv el y . I n o r der t o enh a nc e t h e ef f ec t iv enes s o f t h e o v er a l l o per a t io n o f C T B C F ina nc ia l H o l ding C o m pa ny a nd t o r edu c e o per a t io na l r is k a nd c o s t , t h e B a nk m er g ed w it h C h ina t r u s t B il l s F ina nc e C o r p. , a w h o l l y o w ned s u b s idia r y o f C T B C F ina nc ia l H o l ding C o . , L t d. , b y is s u ing c o m m o n s h a r es in a 0 . 7 7 - f o r - 1 exc h a ng e f o r t h e s h a r es o f C h ina t r u s t B il l s F ina nc e C o r p. o n Apr il 26 , 20 0 8 . T h e B a nk is t h e s u r v iv ing ent it y f r o m t h is m er g er . I n o r der t o r es t r u c t u r e o v er a l l r es o u r c es a nd f u l f il l o per a t ing ef f ic ienc y , t h e B a nk m er g ed w it h C T B C I ns u r a nc e B r o k er s C o . , L t d. , a w h o l l y o w ned s u b s idia r y o f C T B C F ina nc ia l H o l ding C o . , L t d. b y is s u ing c o m m o n s h a r es in a 1 0 . 4 7 - f o r - 1 exc h a ng e f o r t h e s h a r es o f C T B C I ns u r a nc e B r o k er s C o . , L t d. o n N o v em b er 3 0 , 20 1 5 . T h e B a nk is t h e s u r v iv ing ent it y f r o m t h is m er g er . P l ea s e r ef er t o N o t e1 2 ( D ) f o r m o r e inf o r m a t io n. T h e B a nk h a s b een a ppr o v ed t o c o ndu c t b u s ines s in t h e f o l l o w ing a r ea s : ( A) C h ec k ing a c c o u nt s , s a v ing s a c c o u nt s , a nd t im e depo s it s ; ( B ) S h o r t , m ediu m , a nd l o ng - t er m l o a ns ; ( C ) N o t e dis c o u nt ing ; ( D ) I nv es t m ent in m a r k et a b l e s ec u r it ies ; ( E ) D o m es t ic f o r eig n exc h a ng e b u s ines s ;

9

CTBC BANK CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT’D)

9

( F ) B a nk er ’ s a c c ept a nc es ; ( G ) I s s u a nc e o f do m es t ic s t a ndb y l et t er s o f c r edit ; ( H ) D o m es t ic endo r s em ent g u a r a nt ees b u s ines s ; ( I ) C o l l ec t io n a nd pa y m ent a g enc y ; ( J ) Ag enc y f o r g o v er nm ent b o nds , t r ea s u r y b il l s , c o r po r a t e b o nds , a nd s ec u r it ies t r a ns a c t io ns ; ( K ) Ag enc y t r a ns a c t io ns a nd pr o pr iet a r y t r a ding o f s h o r t - t er m b il l s ; ( L ) C r edit c a r d- r el a t ed pr o du c t s ; ( M ) Ag enc y f o r s a l e o f g o l d nu g g et s , g o l d c o ins , a nd s il v er c o ins ; ( N ) F ina nc ia l der iv a t iv e b u s ines s es a s a ppr o v ed b y t h e F ina nc ia l S u per v is o r y C o m m is s io n; ( O ) C u s t o dy a nd w a r eh o u s e s er v ic es ; ( P ) R ent ing o f s a f e- depo s it b o xes ; ( Q ) F ina nc ia l a dv is o r y s er v ic es o n c o r po r a t e b a nk ing ; ( R ) F o r eig n exc h a ng e b u s ines s in c o nnec t io n w it h expo r t s a nd im po r t s , f u nd r em it t a nc e a nd

r epa t r ia t io n, f o r eig n c u r r enc y depo s it s a nd l o a ns ; g u a r a nt ee f o r s ec u r ed r epa y m ent , a nd a t t es t a t io n o n expo r t s a nd im po r t s ;

( S ) N o n- dis c r et io na r y t r u s t f u nds f o r inv es t m ent in f o r eig n a nd do m es t ic m a r k et a b l e s ec u r it ies ; ( T ) Ac c o u nt r ec eiv a b l e f a c t o r ing b u s ines s a s a ppr o v ed b y t h e F ina nc ia l S u per v is o r y

C o m m is s io n; ( U ) E ndo r s em ent a nd is s u a nc e o f c o r po r a t e b o nds ; ( V ) I s s u a nc e o f f ina nc ia l deb ent u r es ; ( W ) U nder w r it ing , a g enc y t r a ns a c t io ns , a nd pr o pr iet a r y t r a ding o f m a r k et a b l e s ec u r it ies ; ( X ) P r o pr iet a r y t r a ding o f g o v er nm ent b o nds ; ( Y ) Al l b u s ines s es r el a t ed t h er et o a s s pec if ied in t h e l ic ens e o r o t h er a g enc y s er v ic es a s

a ppr o v ed b y t h e F ina nc ia l S u per v is o r y C o m m is s io n; ( Z ) T r u s t a nd f idu c ia r y s er v ic es ;

( AA) M a r g ins o n f o r eig n c u r r enc y t r a ns a c t io ns ;

( AB ) I s s u a nc e o f c a s h v a l u e c a r ds ;

10


10

( AC ) P u b l ic w el f a r e l o t t er y s a l es ; ( AD ) F u t u r es pr o pr iet a r y t r a ding b u s ines s ; a nd ( AE ) O t h er b u s ines s es a s a ppr o v ed b y t h e F ina nc ia l S u per v is o r y C o m m is s io n.

T h e B a nk ’ s h ea dq u a r t er s c o o r dina t e c o r po r a t e- w ide o per a t io ns a nd es t a b l is h es do m es t ic a nd o v er s ea s b a nk ing u nit s t o expa nd b u s ines s . As o f D ec em b er 3 1 20 1 5 , t h e B a nk h a d 1 4 8 do m es t ic b r a nc h es , 1 0 f o r eig n b r a nc h es a nd 7 o v er s ea s r epr es ent a t iv e o f f ic es , w h er ea s it s s u b s idia r ies h a d 8 9 o v er s ea s o f f ic es . T h e B a nk ’ s pa r ent c o m pa ny a nd u l t im a t e pa r ent c o m pa ny is C T B C F ina nc ia l H o l ding C o . , L t d.

2. AP P ROV AL DATE AND P ROCEDURES OF TH E FINANCIAL REP ORTS T h e c o ns o l ida t ed f ina nc ia l r epo r t s w er e a ppr o v ed b y t h e b o a r d o f dir ec t o r s o n M a r c h 29 , 20 1 6 .

3. NEW STANDARDS, AMENDMENTS AND INTERP RETATIONS ( A) T h e ef f ec t o n a ppl ic a t io n o f new s t a nda r ds a nd int er pr et a t io ns a s a c c ept ed b y t h e F ina nc ia l

S u per v is o r y C o m m is s io n

S t a r t ing f r o m 20 1 5 , t h e B a nk a nd it s s u b s idia r ies h a v e f u l l y a do pt ed t h e 20 1 3 v er s io n o f I nt er na t io na l F ina nc ia l R epo r t ing S t a nda r ds ( exc l u ding t h e a ppl ic a t io n o f I F R S 9 “ F ina nc ia l I ns t r u m ent s , ” a s a c c ept ed b y t h e F ina nc ia l S u per v is o r y C o m m is s io n ( t h e “ F S C ” ) , w h en c o m pil ing q u a r t er l y c o ns o l ida t ed f ina nc ia l r epo r t s . T h e new l y is s u ed a nd r ev is ed a c c o u nt ing s t a nda r ds a nd int er pr et a t io ns a r e a s f o l l o w s :

New l y is s u ed/ rev is ed accou nting s tandards and interp retations

Ef f ectiv e dates p er International Accou nting

Standards Board Am endm ent t o I F R S 1 - Am ended b y “ L im it ed E xem pt io n f r o m C o m pa r a t iv e

I F R S 7 D is c l o s u r es f o r F ir s t - t im e Ado pt er s . ” J u l y 1 , 20 1 0

Am endm ent t o I F R S 1 - Am ended b y “ S ev er e H y per inf l a t io n a nd R em o v a l o f F ixed D a t es f o r F ir s t - t im e Ado pt er s . ”

J u l y 1 , 20 1 1

Am endm ent t o I F R S 1 - Am ended b y “ G o v er nm ent L o a ns . ” J a nu a r y 1 , 20 1 3 Am endm ent t o I F R S 7 - Am ended b y “ D is c l o s u r es – T r a ns f er s o f F ina nc ia l

As s et s . ” J u l y 1 , 20 1 1

Am endm ent t o I F R S 7 - Am ended b y “ D is c l o s u r es – O f f s et t ing F ina nc ia l As s et s a nd F ina nc ia l L ia b il it ies . ”

J a nu a r y 1 , 20 1 3

I F R S 1 0 “ C o ns o l ida t ed F ina nc ia l S t a t em ent s . ” J a nu a r y 1 , 20 1 3 ( E f f ec t iv e f o r inv es t m ent ent it ies

f o r per io ds b eg inning a f t er J a nu a r y 1 , 20 1 4 )

I F R S 1 1 “ J o int Ar r a ng em ent s . ” J a nu a r y 1 , 20 1 3 I F R S 1 2 “ D is c l o s u r e o f I nt er es t s in O t h er E nt it ies . ” J a nu a r y 1 , 20 1 3 I F R S 1 3 “ F a ir V a l u e M ea s u r em ent . ” J a nu a r y 1 , 20 1 3 Am endm ent t o I AS 1 - Am ended b y “ P r es ent a t io n o f I t em s o f O t h er

C o m pr eh ens iv e I nc o m e. ” J u l y 1 , 20 1 2

Am endm ent t o I AS 1 2- Am ended b y “ D ef er r ed T a x: R ec o v er y o f U nder l y ing As s et s . ”

J a nu a r y 1 , 20 1 2

Am endm ent t o I AS 1 9 - S u per s eded b y “ E m pl o y ee B enef it s . ” J a nu a r y 1 , 20 1 3 Am endm ent t o I AS 27 - S u per s eded a s “ S epa r a t e F ina nc ia l S t a t em ent s . ” J a nu a r y 1 , 20 1 3 Am endm ent t o I AS 3 2- Am ended b y “ O f f s et t ing F ina nc ia l As s et s a nd F ina nc ia l

L ia b il it ies . ” J a nu a r y 1 , 20 1 4

I F R I C 20 “ S t r ipping C o s t s in t h e P r o du c t io n P h a s e o f a S u r f a c e M ine. ” J a nu a r y 1 , 20 1 3

11


11

E xc ept f o r t h e f o l l o w ing l is t ed it em s , t h e a do pt io n o f t h e 20 1 3 v er s io n o f I F R S s b y t h e B a nk a nd it s s u b s idia r ies w o u l d h a v e no s ig nif ic a nt im pa c t o n t h e c o ns o l ida t ed f ina nc ia l r epo r t s .

( a ) I AS 1 “ P r es ent a t io n o f F ina nc ia l S t a t em ent s ”

T h e a m endm ent s c h a ng e t h e pr es ent a t io n o f o t h er c o m pr eh ens iv e inc o m e. T h ey r eq u ir e t h e g r o u ping o f it em s o f o t h er c o m pr eh ens iv e inc o m e int o “ it em s t h a t m ig h t b e r ec l a s s if ied t o pr o f it o r l o s s in s u b s eq u ent per io ds ” a nd “ it em s t h a t w il l no t b e r ec l a s s if ied t o pr o f it o r l o s s in s u b s eq u ent per io ds . ” Al l l ines u nder o t h er c o m pr eh ens iv e inc o m e s h a l l b e pr es ent ed in pr e- t a x a m o u nt s . T h e r el a t ed t a x ef f ec t s s h a l l b e dis c l o s ed s epa r a t el y b a s ed o n t h e a f o r es a id g r o u ping m et h o d. T h e B a nk a nd it s s u b s idia r ies h a v e c h a ng ed t h e pr es ent a t io n o f o t h er c o m pr eh ens iv e inc o m e t o c o nf o r m it y w it h t h e a m endm ent s . M o r eo v er , t h e c o m pa r a t iv e inf o r m a t io n h a s b een r es t a t ed a c c o r ding l y .

( b ) I F R S 1 2 “ D is c l o s u r e o f I nt er es t s in O t h er E nt it ies ”

T h e B a nk a nd it s s u b s idia r ies h a v e m a de a ddit io na l dis c l o s u r es r eg a r ding a s s o c ia t es a nd u nc o ns o l ida t ed ‘ s t r u c t u r ed ent it ies ’ a s pr es c r ib ed in t h e s t a nda r d. P l ea s e r ef er t o N o t e 6 ( M ) a nd ( AP ) , r es pec t iv el y , f o r m o r e inf o r m a t io n.

( c ) I F R S 1 3 “ F a ir V a l u e M ea s u r em ent ”

T h e s t a nda r d r edef ines f a ir v a l u e, pr o v ides a s ing l e I F R S f r a m ew o r k f o r m ea s u r ing f a ir v a l u e a nd r eq u ir es dis c l o s u r es a b o u t f a ir v a l u e m ea s u r em ent . T h e new m ea s u r em ent pr es c r ipt io n h a s no s ig nif ic a nt im pa c t o n a s s et a nd l ia b il it y it em s o f t h e B a nk a nd it s s u b s idia r ies . T h e B a nk a nd it s s u b s idia r ies h a v e m a de a ddit io na l dis c l o s u r es r eg a r ding f a ir v a l u e m ea s u r em ent a s pr es c r ib ed in t h e s t a nda r d, exc ept f o r c o m pa r a t iv e inf o r m a t io n w h ic h is no t r eq u ir ed. P l ea s e r ef er t o N o t e 6 ( AO ) f o r m o r e inf o r m a t io n.

( d) I F R S 7 “ D is c l o s u r es — O f f s et t ing F ina nc ia l As s et s a nd F ina nc ia l L ia b il it ies ” a nd I AS

3 2 “ O f f s et t ing F ina nc ia l As s et s a nd F ina nc ia l L ia b il it ies ” T h e s t a nda r d s pec if ies t h e r el a t ed r u l es r eg a r ding “ t h e ent it y h a s a l eg a l l y enf o r c ea b l e r ig h t t o o f f s et t h e a m o u nt ” a nd “ t h e ent it y int ends eit h er t o s et t l e o n a net b a s is , o r t o r ea l iz e t h e a s s et a nd s et t l e t h e l ia b il it y s im u l t a neo u s l y ” a nd r eq u ir es t h e dis c l o s u r e r eg a r ding t h e po s s ib l e ef f ec t o n a n ent it y ’ s f ina nc ia l po s it io n du e t o t h e net b a s is s et t l em ent . An ev a l u a t io n h a s b een c o ndu c t ed f o r ev a l u a t ing t h e po s s ib l e ef f ec t o n t h e B a nk a nd it s s u b s idia r ies . P l ea s e r ef er t o t h e N o t e 6 ( AO ) f o r a ddit io na l dis c l o s u r es t h e B a nk a nd it s s u b s idia r ies h a v e m a de r eg a r ding net b a s is s et t l em ent .

12


12

( B ) T h e ef f ec t o n new l y is s u ed I nt er na t io na l F ina nc ia l R epo r t ing S t a nda r ds no t y et a c c ept ed b y t h e F S C

L is t ed a s b el o w a r e t h e a c c o u nt ing s t a nda r ds a nd int er pr et a t io ns pr o no u nc ed b y I AS B , b u t no t y et a c c ept ed b y t h e F S C a s o f t h e r epo r t ing da t e o f t h is q u a r t er l y f ina nc ia l r epo r t :

New l y is s u ed/ rev is ed accou nting s tandards and interp retations

Ef f ectiv e dates p er International Accou nting

Standards Board I F R S 9 “ F ina nc ia l I ns t r u m ent s . ” J a nu a r y 1 , 20 1 8 Am endm ent s t o I F R S 1 0 a nd I AS 28 - Am ended b y “ S a l e o r c o nt r ib u t io n o f

a s s et s b et w een a n inv es t o r a nd it s a s s o c ia t e o r j o int v ent u r e. ” E f f ec t iv e da t e t o b e

det er m ined b y I AS B Am endm ent s t o I F R S 1 0 , I F R S 1 2 a nd I AS 28 - Am ended b y “ I nv es t m ent

E nt it ies : Appl y ing t h e C o ns o l ida t io n E xc ept io n. ” J a nu a r y 1 , 20 1 6

Am endm ent s t o I F R S 1 1 - Am ended b y “ Ac c o u nt ing f o r Ac q u is it io ns o f I nt er es t s in J o int O per a t io ns . ”

J a nu a r y 1 , 20 1 6

I F R S 1 4 “ R eg u l a t o r y D ef er r a l Ac c o u nt s . ” J a nu a r y 1 , 20 1 6 I F R S 1 5 “ R ev enu e f r o m C o nt r a c t s w it h C u s t o m er s ” J a nu a r y 1 , 20 1 8 I F R S 1 6 “ L ea s es . ” J a nu a r y 1 , 20 1 9 Am endm ent t o I AS 1 – Am ended b y “ D is c l o s u r e I nit ia t iv e. ” J a nu a r y 1 , 20 1 6 Am endm ent t o I AS 7 – Am ended b y “ D is c l o s u r e init ia t iv e. ” J a nu a r y 1 , 20 1 7 Am endm ent t o I AS 1 2 – Am ended b y “ R ec o g nit io n o f D ef er r ed T a x As s et s

f o r U nr ea l is ed L o s s es . ” J a nu a r y 1 , 20 1 7

Am endm ent s t o I AS 1 6 a nd I AS 3 8 - Am ended b y “ C l a r if ic a t io n o f Ac c ept a b l e M et h o ds o f D epr ec ia t io n a nd Am o r t is a t io n. ”

J a nu a r y 1 , 20 1 6

Am endm ent t o I AS 1 9 - Am ended b y “ D ef ined B enef it P l a ns : E m pl o y ee C o nt r ib u t io ns . ”

J u l y 1 , 20 1 4

Am endm ent t o I AS 27 - Am ended b y “ E q u it y m et h o d in s epa r a t e f ina nc ia l s t a t em ent s . ”

J a nu a r y 1 , 20 1 6

Am endm ent t o I AS 3 6 - Am ended b y “ R ec o v er a b l e Am o u nt D is c l o s u r es f o r N o n- F ina nc ia l As s et s . ”

J a nu a r y 1 , 20 1 4

Am endm ent t o I AS 3 9 - Am ended b y “ N o v a t io n o f D er iv a t iv es a nd C o nt inu a t io n o f H edg e Ac c o u nt ing . ”

J a nu a r y 1 , 20 1 4

Annu a l I m pr o v em ent s t o I F R S s 20 1 0 – 20 1 2 a nd 20 1 1 – 20 1 3 C y c l e J u l y 1 , 20 1 4 Annu a l I m pr o v em ent s t o I F R S s 20 1 2– 20 1 4 C y c l e J a nu a r y 1 , 20 1 6

T h e im pa c t o f a ppl y ing new s t a nda r ds o n t h e f ina nc ia l po s it io n a nd f ina nc ia l per f o r m a nc e o f t h e B a nk a nd it s s u b s idia r ies is u nder ev a l u a t io n. O nc e t h e ev a l u a t io n is c o m pl et ed, t h e B a nk a nd it s s u b s idia r ies w il l dis c l o s e t h e ef f ec t o n t h e f ina nc ia l r epo r t s .

4. SUMMARY OF SIG NIFICANT ACCOUNTING P OLICIES

T h is r epo r t w a s o r ig ina l l y pr epa r ed in C h ines e l a ng u a g e. W h en c o nf l ic t s o r a m b ig u it ies a r is e in int er pr et a t io ns b et w een t h e t w o v er s io ns , t h e C h ines e v er s io n s h a l l pr ev a il . ( A) As s er t io n o f c o m pl ia nc e

T h e c o ns o l ida t ed f ina nc ia l r epo r t s w er e pr epa r ed in a c c o r da nc e w it h t h e R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f F ina nc ia l R epo r t s b y P u b l ic B a nk s , t h e R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f F ina nc ia l R epo r t s b y S ec u r it ies F ir m s , t h e R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f F ina nc ia l R epo r t s b y F u t u r es C o m m is s io n M er c h a nt s , I F R S s , I AS , int er pr et a t io ns a nd pr o no u nc em ent s a s a c c ept ed b y F S C ( “ I F R S s a s a c c ept ed b y F S C ” ) .

13


13

( B ) B a s is o f c o m pil a t io n T h e c o ns o l ida t ed f ina nc ia l r epo r t s h a v e b een pr epa r ed o n a h is t o r ic a l c o s t b a s is exc ept f o r t h e f o l l o w ing m a t er ia l it em s in t h e s t a t em ent o f f ina nc ia l po s it io n: ( a ) F ina nc ia l ins t r u m ent s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ( inc l u ding der iv a t iv e

f ina nc ia l ins t r u m ent s ) ; ( b ) Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e; ( c ) H edg ing der iv a t iv e f ina nc ia l ins t r u m ent s m ea s u r ed a t f a ir v a l u e; ( d) C a s h - s et t l ed s h a r e- b a s ed pa y m ent a g r eem ent s l ia b il it y m ea s u r ed a t f a ir v a l u e; a nd ( e) D ef ined b enef it a s s et s , w h ic h a r e r ec o g niz ed a s t h e net a m o u nt o f pens io n pl a n a s s et s

pl u s u nr ec o g niz ed pr io r s er v ic e c o s t a nd u nr ec o g niz ed a c t u a r ia l l o s s es , m inu s u nr ec o g niz ed a c t u a r ia l g a ins a nd pr es ent v a l u e o f def ined b enef it s o b l ig a t io n.

( C ) B a s is o f c o ns o l ida t io n

( a ) B a s is o f c o m pil a t io n f o r c o ns o l ida t ed f ina nc ia l r epo r t s T h e c o ns o l ida t ed f ina nc ia l r epo r t s enc o m pa s s t h e B a nk it s el f a nd c o nt r o l l ed ent it ies . Al l s ig nif ic a nt int r a - g r o u p t r a ns a c t io ns a r e w r it t en- o f f .

( b ) T h e c o nt r o l o f a s pec ia l pu r po s e ent it y ( “ S P E ” ) b y t h e B a nk a nd it s s u b s idia r ies m a y b e

indic a t ed if t h e f o l l o w ing c r it er ia a r e m et s im u l t a neo u s l y .

1 . T h e ent it y h a s po w er s t o o b t a in t h e m a j o r it y o f t h e b enef it s o f t h e S P E ' s a c t iv it ies t h r o u g h v o t ing r ig h t s o r o t h er r ig h t s ;

2. B y h a v ing a r ig h t t o t h e m a j o r it y o f t h e S P E ' s b enef it s , t h e ent it y is expo s ed t o t h e

S P E ' s b u s ines s r is k s ; 3 . T h e ent it y is c a pa b l e o f u s ing it s l ev er a g e o v er t h e S P E t o inf l u enc e t h e b enef it s o f

t h e S P E .

14


14

( c ) S u b s idia r ies a nd s pec ia l pu r po s e ent it es inc l u ded in t h e c o ns o l ida t ed f ina nc ia l r epo r t s :

Name of P ercentage of Ow ners hip Inv es tor

Comp any

Name of Su bs idiary

P rimary Bu s ines s December 31, 2015

December 31, 2014 C T B C B a nk C o . , L t d. C T B C B a nk

( P h il ippines ) C o r p. P r i m a r il y eng a g es in c o m m er c ia l

b a nk ing a nd f ina nc ing b u s ines s

9 9 . 6 0 % 9 9 . 6 0 %

〃 P T B a nk C T B C I ndo nes ia

P r i m a r il y eng a g es in c o m m er c ia l b a nk ing a nd f ina nc ing b u s ines s

9 9 . 0 0 % 9 9 . 0 0 %

〃 C T B C B a nk C o r p. ( C a na da )


1 0 0 . 0 0 % 1 0 0 . 0 0 %

〃 T h e T o k y o S t a r B a nk , L t d. ( N o t e 1 )


1 0 0 . 0 0 % 1 0 0 . 0 0 %

〃 C T B C C a pit a l C o r p. I nv es t m ent b u s ines s

1 0 0 . 0 0 % 1 0 0 . 0 0 %

C T B C C a pit a l C o r p. C T B C B a nk C o r p. ( U S A)

P r im a r il y eng a g es in c o m m er c ia l b a nk ing a nd f ina nc ing b u s ines s

1 0 0 . 0 0 % 1 0 0 . 0 0 %

T h e T o k y o S t a r B a nk , L t d.

T S B C a pit a l , L t d. F ina nc ing a nd a s s u r a nc e b u s ines s

1 0 0 . 0 0 % 1 0 0 . 0 0 %

〃 T S B S er v ic er , L t d. D eb t m a na g em ent b u s ines s

1 0 0 . 0 0 % 1 0 0 . 0 0 %

〃 T o k y o S t a r B u s ines s F ina nc e, L t d.

F ina nc ing b u s ines s 1 0 0 . 0 0 % 1 0 0 . 0 0 %

〃 R es ident ia l M o r t g a g e B a c k ed S ec u r i t ies ( N o t e 2)

As s et - b a c k ed s ec u r i t y t h a t is s ec u r ed b y m o r t g a g e

- % - %

〃 P ec u nia r y T r u s t C o nt r a c t ( N o t e 2)

M o r t g a g e m a na g em ent / C o l l ec t io n N P L

- % - %

〃 C r edit L ink ed N o t es ( N o t e 2)

A s ec u r it y w it h a n em b edded c r edit def a u l t s w a p

- % - %

〃 As s et - b a c k S ec u r it ies ( N o t e 2)

C o ns u m er l o a n m a na g em ent - % - %

N o t e 1 I n o r der t o expa nd t h e s er v ic e t o N o r t h ea s t As ia , t h e B a nk h a s a c q u ir ed a 1 0 0 % eq u it y s t a k e in T h e T o k y o S t a r B a nk , L t d. o n J u ne 5 , 20 1 4 .

N o t e 2 T h e r ea s o n t h e l is t ed ent it ies a r e inc l u ded in t h e c o ns o l ida t ed f ina nc ia l r epo r t s o f t h e B a nk a nd it s s u b s idia r ies is b ec a u s e t h e B a nk a nd it s s u b s idia r ies h a v e l ev er a g e o v er t h es e ent it ies t h r o u g h dir ec t o r indir ec t inv es t m ent , v o t ing r ig h t s o f t h es e ent it ies , a nd r ig h t s t o eit h er b enef it f r o m t h e m a j o r it y o f t h es e ent it ies ’ pr o f it s o r s u s t a in t h e r is k s . As o f D ec em b er 3 1 , 20 1 5 , t h e B a nk a nd it s s u b s idia r ies h a v e no t , eit h er u nder t h e t er m s o f a ny c o nt r a c t u a l a r r a ng em ent s o r no n- c o nt r a c t u a l a r r a ng em ent s , pr o v ided f ina nc ia l o r o t h er s u ppo r t t o it s s pec ia l pu r po s e ent it ies .

15


15

( d) B el o w a r e inv es t ees exc l u ded in t h e c o ns o l ida t ed f ina nc ia l r epo r t s w h il e t h e B a nk h a s de f a c t o c o nt r o l o r o v er 5 0 % h o l ding s :

Name of P ercentage of Ow ners hip Inv es tor

Comp any Name of Su bs idiary P rimary

Bu s ines s

December 31, 2015

December 31, 2014

Des crip tion C T B C B a nk

C o . , L t d. G C B F ina nc e ( H K )

L im it ed C o r po r a t e l o a ns a nd

inv es t m ent b u s ines s

- %

1 0 0 . 0 0 % T h e c o m pa ny h a s b een l iq u ida t ed in 20 1 5 .

N o t e H u - Y i S o l u t i o n C o r p. ( S h a ng h a i ) ( N o t e)

I nf o r m a t i o n s er v ic e

- %

- %

〃

N o t e: T h e B a nk c o ndu c t s no dir ec t inv es t m ent t o w a r d t h is ent it y ; h o w ev er , t h e ent it y f u l f il l s

t h e def init io n o f “ c o nt r o l o f a n inv es t ee” s pec if ied in I F R S 1 0 .

( D ) F o r eig n c u r r enc y

( a ) A f o r eig n c u r r enc y t r a ns a c t io n, w h ic h is deno m ina t ed o r r eq u ir es s et t l em ent in a f o r eig n c u r r enc y , s h a l l b e r ec o r ded o n init ia l r ec o g nit io n in t h e f u nc t io na l c u r r enc y b y a ppl y ing t h e f o r eig n c u r r enc y s po t exc h a ng e r a t e b et w een t h e f u nc t io na l c u r r enc y a nd t h e f o r eig n c u r r enc y a t t h e da t e o f t h e t r a ns a c t io n.

( b ) At ea c h b a l a nc e s h eet da t e, f o r eig n c u r r enc y m o net a r y it em s s h a l l b e t r a ns l a t ed u s ing

t h e c l o s ing r a t e. N o n- m o net a r y it em s t h a t a r e m ea s u r ed in t er m s o f h is t o r ic a l c o s t in a f o r eig n c u r r enc y s h a l l b e t r a ns l a t ed u s ing t h e exc h a ng e r a t e a t t h e da t e o f t h e t r a ns a c t io n; a nd no n- m o net a r y it em s t h a t a r e m ea s u r ed a t f a ir v a l u e in a f o r eig n c u r r enc y s h a l l b e t r a ns l a t ed u s ing t h e exc h a ng e r a t es a t t h e da t e w h en t h e f a ir v a l u e w a s det er m ined.

( c ) F o r eig n c u r r enc y dif f er enc es a r is ing o n t h e s et t l em ent o f a f o r eig n c u r r enc y t r a ns a c t io n

a r e r ec o g niz ed in c u r r ent pr o f it o r l o s s . F o r eig n c u r r enc y dif f er enc es a r is ing o n t h e r et r a ns l a t io n o f m o net a r y it em s , exc ept f o r dif f er enc es a r is ing o n t h e r et r a ns l a t io n o f m o net a r y it em s des ig na t ed a s h edg ing ins t r u m ent s in a h edg e o f t h e net inv es t m ent s in f o r eig n o per a t io ns o r in a q u a l if y ing c a s h f l o w h edg e a r e r ec o g niz ed dir ec t l y in o t h er c o m pr eh ens iv e inc o m e, a r e r ec o g niz ed in pr o f it o r l o s s w h en it inc u r r ed.

( d) W h en a g a in o r l o s s o n a no n- m o net a r y it em is r ec o g niz ed in o t h er c o m pr eh ens iv e

inc o m e, a ny exc h a ng e dif f er enc e o f t h a t g a in o r l o s s s h a l l b e r ec o g niz ed in o t h er c o m pr eh ens iv e inc o m e. O t h er w is e, w h en a g a in o r l o s s o n a no n- m o net a r y it em is r ec o g niz ed in pr o f it o r l o s s , a ny exc h a ng e dif f er enc e o f t h a t g a in o r l o s s s h a l l b e r ec o g niz ed in pr o f it o r l o s s .

( e) F u nc t io na l c u r r enc y a nd pr es ent a t io n c u r r enc y

T h e f u nc t io na l c u r r enc y o f t h e B a nk a nd it s s u b s idia r ies is t h e c u r r enc y o f t h e pr im a r y ec o no m ic env ir o nm ent in w h ic h t h ey o per a t e. T h e f ina nc ia l r epo r t s a r e pr es ent ed in N ew T a iw a n D o l l a r s , t h e f u nc t io na l c u r r enc y o f t h e B a nk .

16


16

( E ) C a s h a nd c a s h eq u iv a l ent s T h e s t a t em ent s o f c a s h f l o w s a r e c o m pil ed b a s ed u po n c a s h a nd c a s h eq u iv a l ent s . C a s h c o m pr is es c a s h o n h a nd, s a v ing s a c c o u nt s , c h ec k ing a c c o u nt s , a nd u nr es t r ic t ed t im e depo s it s o r neg o t ia b l e c er t if ic a t es o f depo s it w h ic h m a y b e t er m ina t ed a ny t im e w it h o u t im pa ir ing t h e pr inc ipa l . C a s h eq u iv a l ent s c o ns is t o f s h o r t - t er m a nd h ig h l y l iq u id inv es t m ent s t h a t a r e r ea dil y c o nv er t ib l e t o k no w n a m o u nt s o f c a s h a nd w il l m a t u r e w it h in a s h o r t per io d s o t h a t int er es t r a t e f l u c t u a t io ns h a v e l it t l e ef f ec t o n t h eir v a l u es . C a s h eq u iv a l ent s inc l u de s h o r t - t er m b il l s w it h m a t u r it ies w it h in t h r ee m o nt h s f r o m t h e inv es t m ent da t e. C a s h a nd c a s h eq u iv a l ent s c o m pr is e t im e depo s it s t h a t a r e u s ed b y t h e B a nk a nd it s s u b s idia r ies in t h e m a na g em ent o f it s s h o r t - t er m c a s h c o m m it m ent s a nd a r e no t f o r inv es t m ent o r o t h er pu r po s es . Addit io na l l y , t h e a f o r em ent io ned depo s it s a r e r ea dil y c o nv er t ib l e t o f ixed a m o u nt o f c a s h a nd a r e s u b j ec t t o a n ins ig nif ic a nt r is k o f c h a ng es in t h eir f a ir v a l u e.

( F ) F ina nc ia l ins t r u m ent s

( a ) F ina nc ia l a s s et s

F ina nc ia l a s s et s h el d b y t h e B a nk a nd it s s u b s idia r ies a r e r ec o r ded o n t h e t r a ding da t e. E xc ept f o r f ina nc ia l ins t r u m ent s c l a s s if ied a s h el d f o r t r a ding , o t h er f ina nc ia l ins t r u m ent s a r e init ia l l y r ec o g niz ed a t a c q u ir ing o r is s u ing c o s t pl u s t r a ns a c t io n c o s t s . U po n dis po s it io n, t h e c o s t o f s a l e o f eq u it y s ec u r it ies is det er m ined b y t h e m o v ing - a v er a g e m et h o d, a nd t h e c o s t o f s a l e o f deb t s ec u r it ies is det er m ined b y t h e f ir s t - in, f ir s t - o u t ( F I F O ) m et h o d. 1 . F ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s

F ina nc ia l a s s et s a r e c l a s s if ied a s h el d f o r t r a ding if t h ey h a v e b een a c q u ir ed pr inc ipa l l y f o r t h e pu r po s e o f s el l ing o r r epu r c h a s ing in t h e nea r t er m . T h e der iv a t iv e f ina nc ia l ins t r u m ent s h el d b y t h e B a nk a nd it s s u b s idia r ies , exc ept f o r t h o s e des ig na t ed a s h edg ing ins t r u m ent s , a r e c l a s s if ied u nder t h es e a c c o u nt s . T h e B a nk a nd it s s u b s idia r ies des ig na t e f ina nc ia l a s s et s , o t h er t h a n o nes c l a s s if ied a s h el d- f o r - t r a ding , a s a t f a ir v a l u e t h r o u g h pr o f it o r l o s s a t init ia l r ec o g nit io n u nder o ne o f t h e f o l l o w ing s it u a t io ns :

A. D es ig na t io n el im ina t es o r s ig nif ic a nt l y r edu c es a m ea s u r em ent o r r ec o g nit io n

inc o ns is t enc y t h a t w o u l d o t h er w is e a r is e; B . P er f o r m a nc e o f t h e f ina nc ia l a s s et s is ev a l u a t ed o n a f a ir v a l u e b a s is ; C . H y b r id ins t r u m ent s c o nt a in o ne o r m o r e em b edded der iv a t iv es .

F ina nc ia l a s s et s in t h is c a t eg o r y a r e m ea s u r ed a t f a ir v a l u e a t b a l a nc e s h eet da t e. C h a ng es in f a ir v a l u e a r e r ec o g niz ed in pr o f it o r l o s s a s inc u r r ed.

17


17

2. Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net At ea c h b a l a nc e s h eet da t e, t h e f a ir v a l u e is r em ea s u r ed, a nd t h e r es u l t ing g a in o r l o s s f r o m s u c h r em ea s u r em ent is r ec o g niz ed dir ec t l y in o t h er c o m pr eh ens iv e inc o m e. I nt er es t o n a deb t ins t r u m ent c l a s s if ied a s a v a il a b l e- f o r - s a l e is a c c r u ed; t h e r el ev a nt pr em iu m / dis c o u nt is a m o r t iz ed b y u s ing t h e ef f ec t iv e- int er es t - r a t e m et h o d. I f t h er e is o b j ec t iv e ev idenc e t h a t a n a v a il a b l e- f o r - s a l e f ina nc ia l a s s et is im pa ir ed, t h e c a r r y ing a m o u nt o f t h e a s s et is r edu c ed, a nd im pa ir m ent l o s s is r ec o g niz ed. I f , in a s u b s eq u ent per io d, t h e a m o u nt o f t h e im pa ir m ent l o s s o f t h e a v a il a b l e- f o r - s a l e eq u it y s ec u r it ies dec r ea s es , t h e im pa ir m ent l o s s r ec o g niz ed in pr o f it o r l o s s s h a l l no t b e r ev er s ed t h r o u g h pr o f it o r l o s s . I f , in a s u b s eq u ent per io d, t h e a m o u nt o f t h e im pa ir m ent l o s s o f t h e a v a il a b l e- f o r - s a l e deb t s ec u r it ies dec r ea s es a nd t h e dec r ea s e c a n b e r el a t ed o b j ec t iv el y t o a n ev ent o c c u r r ing a f t er t h e im pa ir m ent w a s r ec o g niz ed, t h e pr ev io u s l y r ec o g niz ed im pa ir m ent l o s s is r ev er s ed t h r o u g h pr o f it o r l o s s . T h e c a r r y ing a m o u nt a f t er t h e r ev er s a l s h a l l no t exc eed t h e r ec o v er a b l e a m o u nt o r t h e depr ec ia t ed o r a m o r t iz ed b a l a nc e o f t h e a s s et s a s s u m ing no im pa ir m ent l o s s w a s r ec o g niz ed. A g a in o r l o s s o n a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s is r ec o g niz ed dir ec t l y in o t h er c o m pr eh ens iv e inc o m e, exc ept f o r im pa ir m ent l o s s es a nd f o r eig n exc h a ng e g a ins o r l o s s es a r is ing f r o m m o net a r y f ina nc ia l a s s et s , u nt il t h e f ina nc ia l a s s et s a r e der ec o g niz ed, a t w h ic h t im e t h e c u m u l a t iv e g a in o r l o s s pr ev io u s l y r ec o g niz ed in o t h er c o m pr eh ens iv e inc o m e is c h a r g ed t o pr o f it o r l o s s .

3 . S ec u r it ies u nder r epu r c h a s e/ r ev er s e r epu r c h a s e a g r eem ent s S ec u r it ies s o l d/ pu r c h a s ed w it h a c o m m it m ent t o r epu r c h a s e/ r ev er s e r epu r c h a s e a t pr edet er m ined pr ic e a r e t r ea t ed a s f ina nc ing t r a ns a c t io ns . T h e dif f er enc e b et w een t h e c o s t a nd t h e r epu r c h a s e/ r ev er s e r epu r c h a s e pr ic e is t r ea t ed a s int er es t expens es / r ev enu e a nd r ec o g niz ed o v er t h e t er m o f t h e a g r eem ent . O n t h e s el l ing / pu r c h a s ing da t e, t h es e a g r eem ent s a r e r ec o g niz ed a s s ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s o r s ec u r it ies pu r c h a s ed u nder r ev er s e r epu r c h a s e a g r eem ent s .

4 . L o a ns a nd r ec eiv a b l es

At init ia l r ec o g nit io n, l o a ns a nd r ec eiv a b l es inc l u de inc r em ent a l dir ec t t r a ns a c t io n c o s t s , a nd t h e s u b s eq u ent m ea s u r em ent r ec o g niz es int er es t r ev enu es t h r o u g h t h e ef f ec t iv e int er es t m et h o d o n a c c r u a l b a s is , u nder w h ic h t h e l o a ns a nd r ec eiv a b l es a r e c a r r ied a t a m o r t iz ed c o s t l es s im pa ir m ent l o s s es . L o a ns a r e r ec l a s s if ied a s a no n- a c c r u a l a c c o u nt if eit h er o f t h e f o l l o w ing c o ndit io ns is m et , a nd int er es t c o l l ec t ed w h il e a c c r u ing o f int er es t h a s b een s u s pended is inc l u ded in ea r ning s o nl y t o t h e ext ent o f c a s h a c t u a l l y r ec eiv ed. A. C o l l ec t io n o f pa y m ent o f pr inc ipa l o r int er es t a c c r u ed is c o ns ider ed h ig h l y

u nl ik el y ; o r

B . P a y m ent o f pr inc ipa l o r int er es t a c c r u ed is o v er 3 o r 6 m o nt h s pa s t du e; o r C . P a y m ent o f pr inc ipa l , int er es t a c c r u ed a nd o t h er s u s pens e a c c o u nt o f c r edit

c a r d is o v er 9 0 da y s pa s t du e.

18


18

As t h e pu r po s e o f h o l ding t h o s e c r edit o r ’ s r ig h t s h a s c h a ng ed, t h es e l o a ns h el d f o r s a l e a r e a c c o u nt ed f o r u nder “ o t h er f ina nc ia l a s s et s ” a nd w il l b e v a l u ed u s ing t h e l o w er - o f - c o s t - o r - m a r k et m et h o d in t h e f u t u r e.

W it h r eg a r ds t o l o a ns a nd r ec eiv a b l es , t h e o b j ec t iv e ev idenc e s h a l l b e ident if ied f ir s t t o r ev ea l a ny im pa ir m ent exis t ing f o r f ina nc ia l a s s et s t h a t a r e indiv idu a l l y s ig nif ic a nt , a nd indiv idu a l l y o r c o l l ec t iv el y f o r f ina nc ia l a s s et s t h a t a r e no t indiv idu a l l y s ig nif ic a nt . I f no o b j ec t iv e ev idenc e o f im pa ir m ent exis t s f o r a n indiv idu a l l y a s s es s ed f ina nc ia l a s s et , it s h a l l b e inc l u ded in a s et o f f ina nc ia l a s s et s w it h s im il a r c r edit r is k c h a r a c t er is t ic s a nd c o l l ec t iv el y a s s es s ed f o r im pa ir m ent . As s et s t h a t a r e indiv idu a l l y a s s es s ed f o r im pa ir m ent a r e no t r eq u ir ed t o b e c o l l ec t iv el y a s s es s ed b ec a u s e im pa ir m ent is o r c o nt inu es t o b e r ec o g niz ed.

N o na c c r u a l a c c o u nt s deem ed u nc o l l ec t ib l e a r e w r it t en o f f u po n a ppr o v a l o f t h e b o a r d o f dir ec t o r s . T h e r ec o v er y o f w r it t en- o f f l o a ns a nd a c c o u nt s r ec eiv a b l e is a c c o u nt ed f o r u nder t h e r ev er s a l o f t h e a l l o w a nc e f o r c r edit l o s s es . R es er v es f o r g u a r a nt ees a r e a ppr o pr ia t el y pr o v ided b a s ed o n a n es t im a t e o f pr o b a b l e l o s s es inh er ent in t h e ending b a l a nc es o f g u a r a nt ees , a c c ept a nc es r ec eiv a b l e, a nd c o m m er c ia l pa per . Ano t h er es t im a t e w il l a l s o b e r ea c h ed f o l l o w ing R eg u l a t io ns G o v er ning t h e P r o c edu r es f o r B a nk ing I ns t it u t io ns t o E v a l u a t e As s et s a nd D ea l w it h N o n- per f o r m ing / N o n- a c c r u a l L o a ns is s u ed b y t h e F S C a nd o t h er r el a t ed r eg u l a t io ns . F ina l pr o v is io n w il l b e b a s ed o n t h e h ig h er o f t h e t w o es t im a t es .

5 . H el d- t o - m a t u r it y f ina nc ia l a s s et s －net

T h e a m o r t iz ed c o s t a nd int er es t inc o m e o f h el d- t o - m a t u r it y f ina nc ia l a s s et s a r e det er m ined b y u s ing t h e ef f ec t iv e- int er es t - r a t e m et h o d. I f t h er e is o b j ec t iv e ev idenc e t h a t a h el d- t o - m a t u r it y f ina nc ia l a s s et is im pa ir ed, t h e c a r r y ing a m o u nt o f t h e a s s et is r edu c ed, a nd im pa ir m ent l o s s is r ec o g niz ed. I f , in a s u b s eq u ent per io d, t h e a m o u nt o f t h e im pa ir m ent l o s s dec r ea s es a nd t h e dec r ea s e c a n b e r el a t ed o b j ec t iv el y t o a n ev ent o c c u r r ing a f t er t h e im pa ir m ent w a s r ec o g niz ed, t h e pr ev io u s l y r ec o g niz ed im pa ir m ent l o s s is r ev er s ed t h r o u g h pr o f it o r l o s s . T h e c a r r y ing a m o u nt a f t er t h e r ev er s a l s h a l l no t exc eed t h e r ec o v er a b l e a m o u nt o r t h e depr ec ia t ed o r a m o r t iz ed b a l a nc e o f t h e a s s et s a s s u m ing no im pa ir m ent l o s s w a s r ec o g niz ed.

6 . F ina nc ia l a s s et s c a r r ied a t c o s t

E q u it y ins t r u m ent s w it h no q u o t ed m a r k et pr ic e a r e init ia l l y r ec o g niz ed a t w h o s e f a ir v a l u e pl u s t r a ns a c t io n c o s t s . At ea c h b a l a nc e s h eet da t e, f a ir v a l u e c a n b e r el ia b l y m ea s u r ed if eit h er o f t h e f o l l o w ing c o ndit io ns is m et : A. T h e v a r ia b il it y in t h e r a ng e o f r ea s o na b l e f a ir v a l u e es t im a t es is no t s ig nif ic a nt

f o r t h a t ins t r u m ent ; o r

19


19

B . T h e pr o b a b il it ies o f t h e v a r io u s es t im a t es w it h in t h e r a ng e c a n b e r ea s o na b l y a s s es s ed a nd u s ed in es t im a t ing f a ir v a l u e. I f t h e r a ng e o f r ea s o na b l e f a ir v a l u e es t im a t es is s ig nif ic a nt a nd t h e pr o b a b il it ies o f t h e v a r io u s es t im a t es c a nno t b e r ea s o na b l y a s s es s ed, it is no t per m is s ib l e t o m ea s u r e t h e ins t r u m ent a t f a ir v a l u e; ins t ea d, t h e ins t r u m ent s h a l l b e c a r r ied a t c o s t .

7 . D eb t inv es t m ent s w it h o u t a c t iv e m a r k et s

T h e a m o r t iz ed c o s t a nd int er es t inc o m e o f deb t inv es t m ent s w it h o u t a n a c t iv e m a r k et a r e det er m ined b y u s ing t h e ef f ec t iv e- int er es t r a t e m et h o d. W h en t h er e is o b j ec t iv e ev idenc e t h a t a n im pa ir m ent l o s s o n f ina nc ia l a s s et s h a s b een inc u r r ed, im pa ir m ent l o s s is r ec o g niz ed. I f , in a s u b s eq u ent per io d, t h e a m o u nt o f t h e im pa ir m ent l o s s dec r ea s es a nd t h e dec r ea s e c a n b e r el a t ed o b j ec t iv el y t o a n ev ent o c c u r r ing a f t er t h e im pa ir m ent w a s r ec o g niz ed, t h e pr ev io u s l y r ec o g niz ed im pa ir m ent l o s s is r ev er s ed t h r o u g h pr o f it o r l o s s . T h e c a r r y ing a m o u nt a f t er t h e r ev er s a l s h a l l no t exc eed t h e r ec o v er a b l e a m o u nt o r t h e depr ec ia t ed o r a m o r t iz ed b a l a nc e o f t h e a s s et s a s s u m ing no im pa ir m ent l o s s w a s r ec o g niz ed.

8 . F ina nc ia l a s s et s init ia l l y c l a s s if ied a s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s

( o t h er t h a n der iv a t iv e f ina nc ia l a s s et s a nd t h o s e des ig na t ed a s a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ) m a y b e r ec l a s s if ied int o o t h er c a t eg o r ies if t h o s e f ina nc ia l a s s et s a r e no l o ng er h el d f o r t h e pu r po s e o f s el l ing a nd m eet t h e c r it er ia l is t ed b el o w ; f ina nc ia l a s s et s init ia l l y c l a s s if ied a s a v a il a b l e- f o r - s a l e t h a t w o u l d h a v e m et t h e def init io n o f h el d- t o - m a t u r it y f ina nc ia l a s s et s o r l o a ns a nd r ec eiv a b l es m a y b e r ec l a s s if ied o u t o f t h e a v a il a b l e- f o r - s a l e c a t eg o r y t o t h e l o a ns a nd r ec eiv a b l es . T h e a c c o u nt ing t r ea t m ent s o n t h e da t e o f r ec l a s s if ic a t io n a r e s u m m a r iz ed a s f o l l o w s :

A. W h en f ina nc ia l a s s et s init ia l l y c l a s s if ied a s m ea s u r ed a t f a ir v a l u e t h r o u g h

pr o f it o r l o s s h a v e m et t h e def init io n o f l o a ns a nd r ec eiv a b l es a nd t h e ent it y h a s t h e int ent io n a nd a b il it y t o h o l d t h e f ina nc ia l a s s et s f o r t h e f o r es eea b l e f u t u r e o r u nt il m a t u r it y , t h ey s h a l l b e r ec l a s s if ied a t t h eir v a l u e o n t h e da t e o f r ec l a s s if ic a t io n, w h ic h w il l b ec o m e t h eir new c o s t o r a m o r t iz ed c o s t , a s a ppl ic a b l e. Any pr ev io u s g a in o r l o s s a l r ea dy r ec o g niz ed in pr o f it o r l o s s s h a l l no t b e r ev er s ed.

B . F ina nc ia l a s s et s init ia l l y c l a s s if ied a s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r

l o s s w h ic h do no t m eet t h e pr ec eding c r it er io n m a y b e r ec l a s s if ied o u t o f t h e f a ir v a l u e t h r o u g h pr o f it o r l o s s c a t eg o r y o nl y in r a r e c ir c u m s t a nc es a nd s h a l l b e r ec l a s s if ied a t t h eir f a ir v a l u e o n t h e da t e o f r ec l a s s if ic a t io n, w h ic h w il l b ec o m e t h eir new c o s t o r a m o r t iz ed c o s t , a s a ppl ic a b l e. Any pr ev io u s g a in o r l o s s a l r ea dy r ec o g niz ed in pr o f it o r l o s s s h a l l no t b e r ev er s ed.

C . W h en f ina nc ia l a s s et s init ia l l y c l a s s if ied a s a v a il a b l e- f o r - s a l e h a v e m et t h e

def init io n o f l o a ns a nd r ec eiv a b l es a nd t h e ent it y h a s t h e int ent io n a nd a b il it y t o h o l d t h e f ina nc ia l a s s et s f o r t h e f o r es eea b l e f u t u r e o r u nt il m a t u r it y , t h ey s h a l l b e r ec l a s s if ied a t t h eir v a l u e o n t h e da t e o f r ec l a s s if ic a t io n, w h ic h w il l b ec o m e t h eir new c o s t o r a m o r t iz ed c o s t , a s a ppl ic a b l e.

20


2 0

D . F o r a ny pr ev io u s g a in o r l o s s o n a f ina nc ia l a s s et t h a t h a s b een r ec o g niz ed dir ec t l y u nder o w ner s ’ eq u it y , if t h e f ina nc ia l a s s et h a s a f ixed m a t u r it y , t h e g a in o r l o s s s h a l l b e a m o r t iz ed t o c u r r ent pr o f it o r l o s s o v er t h e r em a ining l if e o f t h e f ina nc ia l a s s et ; if no t , t h e g a in o r l o s s r em a ins u nder o w ner s ’ eq u it y .

9 . F ina nc ia l a s s et im pa ir m ent

I f t h er e is a n o b j ec t iv e ev idenc e t h a t a n im pa ir m ent l o s s o n f ina nc ia l a s s et s h a s b een inc u r r ed, t h e a m o u nt o f t h e l o s s is r ec o g niz ed a nd m ea s u r ed a s t h e dif f er enc e b et w een t h e a s s et ’ s c a r r y ing a m o u nt a nd t h e pr es ent v a l u e o f es t im a t ed f u t u r e c a s h f l o w s dis c o u nt ed a t t h e f ina nc ia l a s s et ’ s o r ig ina l ef f ec t iv e int er es t r a t e; t h e a m o u nt o f t h e l o s s s h a l l b e r ec o g niz ed in pr o f it o r l o s s in t h e c u r r ent per io d. T h e es t im a t io n o f f u t u r e c a s h f l o w s inc l u des t h e r ec o v er a b l e a m o u nt o f c o l l a t er a l a nd r el a t ed ins u r a nc e w h en det er m ining t h e a m o u nt o f t h e l o s s . T h e a f o r es a id o b j ec t iv e ev idenc e inc l u des : A. S ig nif ic a nt f ina nc ia l dif f ic u l t y o f t h e is s u er o r o b l ig o r ; B . A b r ea c h o f c o nt r a c t , s u c h a s a def a u l t o r del inq u enc y in int er es t o r pr inc ipa l

pa y m ent s ; C . T h e l ender , f o r ec o no m ic o r l eg a l r ea s o ns r el a t ing t o t h e b o r r o w er ’ s f ina nc ia l

dif f ic u l t y , g r a nt ing t o t h e b o r r o w er a c o nc es s io n t h a t t h e l ender w o u l d no t o t h er w is e c o ns ider ;

D . I t is b ec o m ing pr o b a b l e t h a t t h e b o r r o w er w il l ent er b a nk r u pt c y o r o t h er

f ina nc ia l r eo r g a niz a t io n; E . T h e dis a ppea r a nc e o f a n a c t iv e m a r k et f o r t h a t f ina nc ia l a s s et b ec a u s e o f t h e

is s u er ’ s f ina nc ia l dif f ic u l t ies ; F . Adv er s e c h a ng es in t h e pa y m ent s t a t u s o f t h e b o r r o w er ; a nd G . C h a ng es in na t io na l o r l o c a l ec o no m ic c o ndit io ns t h a t c o r r el a t e w it h def a u l t s

o n t h e a s s et s .

1 0 . D er ec o g nit io n o f f ina nc ia l a s s et s T h e B a nk o r it s s u b s idia r ies s h a l l der ec o g niz e a f ina nc ia l a s s et w h en t h e c o nt r a c t u a l r ig h t s t o t h e c a s h f l o w s f r o m t h e f ina nc ia l a s s et expir e o r w h en t h e B a nk o r it s s u b s idia r ies t r a ns f er s u b s t a nt ia l l y a l l t h e r is k s a nd r ew a r ds o f o w ner s h ip o f t h e f ina nc ia l a s s et s .

S ec u r it ies l ending a g r eem ent o r r epu r c h a s e t r a ns a c t io ns , w h er e b o nds o r s t o c k s a r e t a k en a s c o l l a t er a l , s h a l l no t b e der ec o g niz ed, b ec a u s e t h e B a nk o r it s s u b s idia r ies h a v e r et a ined s u b s t a nt ia l l y a l l t h e r is k s a nd r ew a r ds o f o w ner s h ip. T h e t r a ns a c t io n o f a s s et b a c k ed s ec u r it iz a t io n is a ppl y ing t o s u c h s it u a t io n w h en t h e B a nk o r it s s u b s idia r ies s t il l r et a ined pa r t ia l r is k s .

21


2 1

( b ) F ina nc ia l l ia b il it ies T h e f ina nc ia l l ia b il it y h el d b y t h e B a nk o r it s s u b s idia r ies inc l u des a f ina nc ia l l ia b il it y m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ( inc l u ding t h e ins t r u m ent s des ig na t ed a s a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ) , a m o r t iz ed c o s t o f a f ina nc ia l l ia b il it y a nd h edg e der iv a t iv es . 1 . F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s

A f ina nc ia l l ia b il it y is h el d f o r t r a ding if it is a c q u ir ed o r inc u r r ed pr inc ipa l l y f o r t h e pu r po s e o f s el l ing o r r epu r c h a s ing it in t h e nea r t er m ; o n init ia l r ec o g nit io n it is pa r t o f a po r t f o l io o f ident if ied f ina nc ia l ins t r u m ent s t h a t a r e m a na g ed t o g et h er a nd f o r w h ic h t h er e is ev idenc e o f a r ec ent a c t u a l pa t t er n o f s h o r t - t er m pr o f it - t a k ing . A der iv a t iv e, exc ept f o r a der iv a t iv e t h a t is a f ina nc ia l g u a r a nt ee c o nt r a c t o r a des ig na t ed a nd ef f ec t iv e h edg ing ins t r u m ent , is c l a s s if ied a s ins t r u m ent h el d f o r t r a ding a s w el l . F ina nc ia l l ia b il it ies h el d f o r t r a ding inc l u de o b l ig a t io ns t o del iv er f ina nc ia l a s s et s b o r r o w ed b y a s h o r t s el l er . T h e B a nk a nd it s s u b s idia r ies des ig na t e f ina nc ia l l ia b il it ies , a s a t f a ir v a l u e t h r o u g h pr o f it o r l o s s a t init ia l r ec o g nit io n u nder o ne o f t h e f o l l o w ing s it u a t io ns :

A. D es ig na t io n el im ina t es o r s ig nif ic a nt l y r edu c es a m ea s u r em ent o r r ec o g nit io n

inc o ns is t enc y t h a t w o u l d o t h er w is e a r is e; B . P er f o r m a nc e o f t h e f ina nc ia l l ia b il it y is ev a l u a t ed o n a f a ir v a l u e b a s is ; C . A h y b r id ins t r u m ent c o nt a ins o ne o r m o r e em b edded der iv a t iv es .

F ina nc ia l l ia b il it ies f a l l ing u nder t h is c a t eg o r y a r e m ea s u r ed a t f a ir v a l u e in t h e b a l a nc e s h eet a t t h e b a l a nc e s h eet da t e. M o r eo v er , t h e c h a ng es in f a ir v a l u e a r e r ec o g niz ed a s c u r r ent pr o f it o r l o s s . W h il e f o r f ina nc ia l l ia b il it ies des ig na t ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s , it s f a ir v a l u e c h a ng ed in t h e l ia b il it y ’ s c r edit r is k s h o u l d b e r ec o g niz ed u nder o t h er c o m pr eh ens iv e inc o m e, exc ept f o r a v o iding a c c o u nt ing m is m a t c h o r in t h e c ir c u m s t a nc es o f l o a n c o m m it m ent s a nd f ina nc ia l g u a r a nt ee c o nt r a c t t o pr o v ide a l o a n t h a t s h o u l d b e a c c o u nt ed a s c u r r ent pr o f it o r l o s s . U nder c er t a in c ir c u m s t a nc es , t h e B a nk m a y no t r ec o g niz e pr o f it o r l o s s o f a f ina nc ia l a s s et o r f ina nc ia l l ia b il it y a t init ia l r ec o g nit io n, if a f a ir v a l u e is no t der iv ed f r o m a q u o t ed m a r k et pr ic e in a n a c t iv e m a r k et a nd is b a s ed o n t h e ev a l u a t io n m et h o d w it h da t a r et r iev ed f r o m u no b s er v a b l e m a r k et . I n t h e a b o v e s c ena r io , t h e r ec o g nit io n o f t h e dif f er enc e b et w een f a ir v a l u e a t init ia l r ec o g nit io n a nd t r a ns a c t io n pr ic e is def er r ed. Af t er init ia l r ec o g nit io n, t h e ent it y s h a l l r ec o g niz e t h e a f o r es a id def er r ed dif f er enc e a s a g a in o r l o s s o nl y t o t h e ext ent t h a t it a r is es f r o m a c h a ng e in a f a c t o r t h a t m a r k et pa r t ic ipa nt s w o u l d t a k e int o a c c o u nt w h en pr ic ing t h e a s s et o r l ia b il it y .

22


2 2

2. Am o r t iz ed c o s t o f a f ina nc ia l l ia b il it y F ina nc ia l l ia b il it ies a r e c l a s s if ied a t a m o r t iz ed c o s t o f a f ina nc ia l l ia b il it y , exc ept f o r f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s , h edg ed der iv a t iv es f ina nc ia l l ia b il it y , f ina nc ia l b o nds pa y a b l e, f ina nc ia l g u a r a nt ee c o nt r a c t s , c o m m it m ent s t o pr o v ide a l o a n a t a b el o w - m a r k et int er es t r a t e a nd f ina nc ia l l ia b il it ies t h a t a r is e w h en a t r a ns f er o f a f ina nc ia l a s s et do es no t q u a l if y f o r der ec o g nit io n o r w h en t h e c o nt inu ing inv o l v em ent a ppr o a c h a ppl ies .

3 . D er ec o g nit io n o f a f ina nc ia l l ia b il it y T h e B a nk a nd it s s u b s idia r ies s h a l l r em o v e a f ina nc ia l l ia b il it y f r o m it s s t a t em ent o f f ina nc ia l po s it io n w h en, a nd o nl y w h en, it is ext ing u is h ed.

( c ) D er iv a t iv es a nd h edg ing a c c o u nt ing

D er iv a t iv e ins t r u m ent s a r e init ia l l y r ec o g niz ed a t f a ir v a l u e o n c o nt r a c t da t e a nd s u b s eq u ent l y m ea s u r ed a t f a ir v a l u e. F a ir v a l u e inc l u des q u o t ed pr ic e in a n a c t iv e m a r k et , o c c u r r ing m a r k et t r a ns a c t io n pr ic es o r m o del v a l u a t io n t ec h niq u e. Al l der iv a t iv es ins t r u m ent s a r e r ec o g niz ed a s a s s et s w it h po s it iv e f a ir v a l u e a nd a s l ia b il it y w it h neg a t iv e f a ir v a l u e.

T h e B a nk a nd it s s u b s idia r ies s h o u l d a c c o u nt s f o r a n em b edded der iv a t iv e s epa r a t el y f r o m t h e h o s t c o nt r a c t w h en t h e h o s t c o nt r a c t is no t it s el f c a r r ied a t f a ir v a l u e t h r o u g h pr o f it o r l o s s , t h e t er m s o f t h e em b edded der iv a t iv e w o u l d m eet t h e def init io n t h a t t h e ec o no m ic c h a r a c t er is t ic s a nd r is k s o f t h e em b edded der iv a t iv e a r e no t c l o s el y r el a t ed t o t h e ec o no m ic c h a r a c t er is t ic s a nd r is k s o f t h e h o s t c o nt r a c t , a nd t h e ent ir e h y b r id c o nt r a c t is no t des ig na t ed a s a t f a ir v a l u e t h r o u g h pr o f it o r l o s s . I n a ddit io n, t h e em b edded der iv a t iv e is r ec o g niz ed a s f ina nc ia l a s s et o r l ia b il it y a s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s . W h en a f a ir v a l u e h edg e, c a s h f l o w h edg e, a nd h edg e o f a net inv es t m ent in a f o r eig n o per a t io n a r e in c o nf o r m it y w it h a l l t h e c o ndit io ns f o r a ppl y ing h edg e a c c o u nt ing , t h e a f f ec t ed pr o f it o r l o s s is r ec o g niz ed b y o f f s et t ing t h e c h a ng es in t h e f a ir v a l u e o f h edg ing ins t r u m ent s a nd h edg ed it em s . T h e r el a t ed a c c o u nt ing t r ea t m ent s a r e a s f o l l o w s : 1 . F a ir v a l u e h edg e: C h a ng es in t h e f a ir v a l u e o f der iv a t iv es t h a t a r e des ig na t ed a nd

q u a l if ied a s f a ir v a l u e h edg ing ins t r u m ent s a g a ins t t h e expo s u r e t o c h a ng es in f a ir v a l u e o f a r ec o g niz ed a s s et o r l ia b il it y o r a n u nr ec o g niz ed f ir m c o m m it m ent a r e r ec o g niz ed t h r o u g h pr o f it o r l o s s in t h e c u r r ent per io d.

2. C a s h f l o w h edg e: W h er e a der iv a t iv e f ina nc ia l ins t r u m ent is des ig na t ed a s a h edg e

o f t h e v a r ia b il it y in c a s h f l o w o f a r ec o g niz ed a s s et o r l ia b il it y o r a h ig h l y pr o b a b l e f o r ec a s t t r a ns a c t io n, t h e ef f ec t iv e po r t io n o f a ny g a in o r l o s s o n r em ea s u r em ent o f t h e der iv a t iv e f ina nc ia l ins t r u m ent t o f a ir v a l u e is r ec o g niz ed dir ec t l y u nder o t h er c o m pr eh ens iv e inc o m e. W h en t h e h edg ed t r a ns a c t io n a c t u a l l y a f f ec t s t h e pr o f it o r l o s s , t h e g a in o r l o s s pr ev io u s l y r ec o g niz ed u nder o t h er c o m pr eh ens iv e inc o m e s h a l l b e r ec o g niz ed t h r o u g h c u r r ent pr o f it o r l o s s . Any g a in o r l o s s f r o m t h e c h a ng e in f a ir v a l u e r el a t ing t o a n inef f ec t iv e po r t io n o f t h e h edg e t r a ns a c t io n is r ec o g niz ed im m edia t el y t h r o u g h pr o f it o r l o s s in t h e c u r r ent per io d.

23


2 3

3 . H edg e o f a net inv es t m ent in a f o r eig n o per a t io n: T h e ef f ec t iv e po r t io n o f a ny g a in o r l o s s o n a h edg ing ins t r u m ent r el a t ing t o a h edg e a g a ins t f o r eig n c u r r enc y f l u c t u a t io n in a f o r eig n o per a t io n is r ec o g niz ed dir ec t l y in o t h er c o m pr eh ens iv e inc o m e u nt il t h e dis po s a l o f t h e f o r eig n o per a t io n, a t w h ic h t im e t h e c u m u l a t iv e g a in o r l o s s r ec o g niz ed dir ec t l y u nder o t h er c o m pr eh ens iv e inc o m e is r ec o g niz ed in pr o f it o r l o s s in t h e c u r r ent per io d.

( d) F ina nc ia l g u a r a nt ee c o nt r a c t s

T h e B a nk a nd it s s u b s idia r ies r ec o g niz e f ina nc ia l g u a r a nt ee l ia b il it ies init ia l l y a t t h eir f a ir v a l u e a t t h e da t e o f pr o v iding g u a r a nt ee. T h e B a nk a nd it s s u b s idia r ies r ec eiv e c o m m is s io n inc o m e w it h no n- a r m ’ s - l eng t h t r a ns a c t io n a t c o nt r a c t da t e; t h is is , t h e inc o m e c o u l d r epr es ent t h e f a ir v a l u e o f f ina nc ia l g u a r a nt ee c o nt r a c t . T h e a dv a nc ed s er v ic e f ee is r ec o g niz ed a s def er r ed it em a nd a m o r t iz ed b y s t r a ig h t - l ine m et h o d o v er t h e l if e o f t h e f ina nc ia l g u a r a nt ee. F ina nc ia l g u a r a nt ee c o nt r a c t s s h a l l b e s u b s eq u ent l y m ea s u r ed b y t h e B a nk a nd it s s u b s idia r ies a t t h e h ig h er o f : 1 . T h e a m o u nt det er m ined in a c c o r da nc e w it h “ P r o v is io ns ” ; a nd 2. T h e a m o u nt init ia l l y r ec o g niz ed l es s , w h en a ppr o pr ia t e, c u m u l a t iv e a m o r t iz a t io n

r ec o g niz ed f r o m def er r ed r ev enu es .

( G ) N o n- f ina nc ia l a s s et im pa ir m ent At ea c h b a l a nc e s h eet da t e, t h e r ec o v er a b l e a m o u nt o f a n a s s et is es t im a t ed a nd c o m pa r ed w it h t h e c a r r y ing a m o u nt w h enev er t h er e is a n indic a t io n t h a t t h e no n- f ina nc ia l a s s et m a y b e im pa ir ed. An im pa ir m ent l o s s is r ec o g niz ed w h en t h e r ec o v er a b l e a m o u nt , h ig h er o f f a ir m a r k et v a l u e o r v a l u e in u s e, is l es s t h a n t h e c a r r y ing a m o u nt . F o r a s s et s o t h er t h a n g o o dw il l , r ev er s a l o f im pa ir m ent l o s s is r ec o g niz ed w h en t h e r ec o v er a b l e a m o u nt o f t h e a s s et h a s inc r ea s ed f r o m it s pr io r - per io d es t im a t io n. T h e c a r r y ing a m o u nt a f t er t h e r ev er s a l s h a l l no t exc eed t h e r ec o v er a b l e a m o u nt o r t h e depr ec ia t ed o r a m o r t iz ed b a l a nc e o f t h e a s s et s a s s u m ing no im pa ir m ent l o s s w a s r ec o g niz ed in pr io r per io ds .

( H ) As s et s h el d f o r s a l e F o r a n a s s et o r dis po s a l g r o u p t o b e c l a s s if ied a s h el d f o r s a l e, it needs t o b e dis po s ed o f t h r o u g h s a l e r a t h er t h a n t h r o u g h c o nt inu ing u s e t o r ec o v er it s c a r r y ing a m o u nt . As s et s o r dis po s a l g r o u ps t h a t m eet t h e c r it er ia t o b e c l a s s if ied a s s u c h m u s t b e s u b j ec t o nl y t o t er m s t h a t a r e u s u a l a nd c u s t o m a r y a nd b e a v a il a b l e f o r im m edia t e s a l e, w h ic h is h ig h l y pr o b a b l e, w it h in o ne y ea r o f s u c h c l a s s if ic a t io n. Af t er b eing c l a s s if ied a s h el d f o r s a l e, it is m ea s u r ed a t t h e l o w er o f c a r r y ing a m o u nt a nd f a ir v a l u e l es s c o s t s t o s el l . Am o r t iz a t io n o r depr ec ia t io n o n int a ng ib l e a s s et s , pr em is es a nd eq u ipm ent c ea s es o nc e t h ey a r e c l a s s if ied a s h el d f o r s a l e.

24


2 4

( I ) I nv es t m ent s in a s s o c ia t es I nv es t m ent s in a s s o c ia t es in w h ic h t h e B a nk is a b l e t o exer c is e s ig nif ic a nt inf l u enc e a nd s u b s idia r ies t h e B a nk h a s c o nt r o l o v er , a r e a c c o u nt ed f o r u nder t h e eq u it y m et h o d a nd init ia l l y r ec o g niz ed a t c o s t . G o o dw il l , dedu c t ing a c c u m u l a t ed im pa ir m ent l o s s , r el a t ing t o a n a s s o c ia t e is inc l u ded in t h e c a r r y ing a m o u nt o f t h e inv es t m ent . T h e eq u it y m et h o d dis c o nt inu es t o b e u s ed f r o m t h e da t e w h en it c ea s es t o h a v e s ig nif ic a nt inf l u enc e, a nd t h e b o o k v a l u e is t a k en a s t h e new c o s t o f t h e inv es t m ent . T h e B a nk h a s s ig nif ic a nt inf l u enc e if h o l ding , dir ec t l y o r indir ec t l y 20 % o r m o r e o f t h e v o t ing r ig h t o f t h e inv es t ee. H o w ev er , a n exc ept io n w il l a ppl y if t h e B a nk c a n s pec if y t h a t it h a s no s ig nif ic a nt inf l u enc e o v er a n inv es t ee. Af t er t h e da t e o f a c q u is it io n t h e B a nk o r it s s u b s idia r ies ’ s h a r e o f t h e pr o f it o r l o s s o f t h e a s s o c ia t es is r ec o g niz ed in pr o f it o r l o s s . D is t r ib u t io ns r ec eiv ed f r o m a n a s s o c ia t e r edu c e t h e c a r r y ing a m o u nt o f t h e inv es t m ent . Adj u s t m ent s t o t h e c a r r y ing a m o u nt o f t h e inv es t m ent m a y a l s o b e nec es s a r y f o r c h a ng es in t h e B a nk o r it s s u b s idia r ies ’ pr o po r t io na t e int er es t in t h e a s s o c ia t es a r is ing f r o m c h a ng es in t h e a s s o c ia t es ’ o t h er c o m pr eh ens iv e inc o m e. I f t h e B a nk o r it s s u b s idia r ies ’ s h a r e o f l o s s es o f a n a s s o c ia t e eq u a l s o r exc eeds t h eir int er es t in t h e a s s o c ia t e ( inc l u ding no n- g u a r a nt ee l o ng - t er m r ec eiv a b l es ) , t h e B a nk o r it s s u b s idia r ies dis c o nt inu es r ec o g niz ing it s s h a r e o f f u r t h er l o s s es . Addit io na l l o s s es a r e pr o v ided f o r , a nd a l ia b il it y is r ec o g niz ed, o nl y t o t h e ext ent t h a t t h e B a nk o r it s s u b s idia r ies h a s inc u r r ed l eg a l o r c o ns t r u c t iv e o b l ig a t io ns o r m a de pa y m ent s o n b eh a l f o f t h e a s s o c ia t e. C h a ng es in o w ner s h ip int er es t in a s u b s idia r y t h a t do no t r es u l t in a l o s s o f c o nt r o l a r e a c c o u nt ed f o r a s eq u it y t r a ns a c t io ns . I n s u c h c ir c u m s t a nc es t h e c a r r y ing a m o u nt s o f t h e pa r ent ’ s o w ner s h ip int er es t a nd no n- c o nt r o l l ing int er es t s s h a l l b e a dj u s t ed t o r ef l ec t t h e c h a ng es in t h eir r el a t iv e int er es t s in t h e s u b s idia r y . Any dif f er enc e b et w een t h e a m o u nt b y w h ic h t h e no n- c o nt r o l l ing int er es t s a r e a dj u s t ed a nd t h e f a ir v a l u e o f t h e c o ns ider a t io n pa id o r r ec eiv ed s h a l l b e r ec o g niz ed dir ec t l y in eq u it y .

( J ) C a s h s u r r ender v a l u e o f l if e ins u r a nc e T h e B a nk ’ s U . S . s u b s idia r y pu r c h a s ed s ing l e- pr em iu m l if e ins u r a nc e u nder w h ic h t h e exec u t iv e o f f ic er s a nd dir ec t o r s a r e t h e ins u r ed, w h il e t h e s u b s idia r y is t h e o w ner a nd b enef ic ia r y t h er eo f . T h e c a s h s u r r ender v a l u e indic a t es t h e a m o u nt t h a t w o u l d b e r ec eiv ed if t h e l if e ins u r a nc e is t er m ina t ed pr io r t o t h e m a t u r it y da t e, a nd is a c c o u nt ed f o r u nder “ o t h er a s s et s . ”

( K ) P r em is es a nd eq u ipm ent T h e B a nk a nd it s s u b s idia r ies ’ pr o per t y a nd eq u ipm ent a r e r ec o g niz ed a f t er dedu c t ing a ny a c c u m u l a t ed depr ec ia t io n a nd a c c u m u l a t ed im pa ir m ent l o s s es f r o m h is t o r ic a l c o s t . T h e h is t o r ic a l c o s t inc l u des a ny c o s t s dir ec t l y a t t r ib u t a b l e t o a c q u ir ing t h e a s s et s .

25


2 5

S u b s eq u ent expendit u r e o f pr o per t y a nd eq u ipm ent s h a l l b e r ec o g niz ed a s a n a s s et o r b e inc l u ded in t h e c a r r y ing a m o u nt o f a s s et s , w h en, a nd o nl y w h en it is pr o b a b l e t h a t t h e f u t u r e ec o no m ic b enef it s t h a t a r e a s s o c ia t ed w it h pr o per t y a nd eq u ipm ent w il l f l o w t o t h e B a nk o r it s s u b s idia r ies , a nd t h e c o s t o f pr o per t y a nd eq u ipm ent c a n b e m ea s u r ed r el ia b l y . T h e c a r r y ing a m o u nt o f t h o s e pa r t s t h a t a r e r epl a c ed is der ec o g niz ed. A m a j o r im pr o v em ent o r r epa ir expens e t h a t c a n ext end t h e b enef it s o v er a f t er w a r d per io d is r eg a r ds a s c a pit a l expendit u r e; w h il e f r eq u ent m a int ena nc e o r r epa ir s a r e c h a r g ed t o c u r r ent expens es .

I f t h e B a nk a nd it s s u b s idia r ies h a v e o b l ig a t io ns t o dis m a nt l e, r em o v e a nd r es t o r e t h e pr o per t y a nd eq u ipm ent , t h e o b l ig a t io n f o r w h ic h t h e B a nk a nd it s s u b s idia r ies inc u r s eit h er w h en t h e it em is a c q u ir ed o r a s a c o ns eq u enc e o f h a v ing u s ed t h e it em du r ing a pa r t ic u l a r per io d s h a l l b e r ec o g niz ed a s t h e c o s t o f t h e pr o per t y a nd eq u ipm ent a s w el l a s l ia b il it y . D epr ec ia t io n is c o m pu t ed u s ing t h e s t r a ig h t - l ine m et h o d; t h e u s ef u l l iv es a r e c a l c u l a t ed b a s ed o n t h e no r m a l ec o no m ic l iv es . E a c h pa r t o f a n it em o f pr o per t y a nd eq u ipm ent w it h a c o s t t h a t is s ig nif ic a nt in r el a t io n t o t h e t o t a l c o s t o f t h e it em s h a l l b e depr ec ia t ed s epa r a t el y . T h e r es idu a l v a l u e a nd t h e u s ef u l l if e o f a n a s s et s h a l l b e r ev iew ed o r a deq u a t el y a dj u s t ed a t ea c h f ina nc ia l y ea r - end. U s ef u l l iv es o f m a j o r pr em is es a nd eq u ipm ent a r e a s f o l l o w s : B u il ding s a nd pr em is es 2 5 6 y ea r s T r a ns po r t a t io n eq u ipm ent 4 6 y ea r s M is c el l a neo u s eq u ipm ent 2 20 y ea r s T h e g a in o r l o s s a r is ing f r o m t h e dis po s it io n o f a n it em o f pr o per t y a nd eq u ipm ent s h a l l b e r ec o g niz ed in c u r r ent pr o f it o r l o s s a nd det er m ined a s t h e dif f er enc e b et w een t h e dis po s a l pr o c eeds a nd t h e c a r r y ing a m o u nt o f t h e it em .

( L ) I nt a ng ib l e a s s et s

( a ) C o m pu t er s o f t w a r e

C o m pu t er s o f t w a r e s y s t em expens es , w h ic h a r e r ec o r ded o n t h e b a s is o f t h e a c t u a l c o s t o f a c q u is it io n, a r e a m o r t iz ed u s ing a s t r a ig h t - l ine m et h o d o v er a per io d o f 3 t o 1 5 y ea r s . I t s a m o r t iz a t io n m et h o d, u s ef u l l if e a nd r es idu a l v a l u e a r e r ef er r ed t o t h e r eg u l a t io n o f pr o per t ies a nd eq u ipm ent . T h e B a nk a nd it s s u b s idia r ies u s e c o s t m o del t o pr o c eed s u b s eq u ent l y m ea s u r em ent .

( b ) G o o dw il l T h e B a nk a nd it s s u b s idia r ies a c c o u nt a b u s ines s c o m b ina t io n b y a ppl y ing t h e a c q u is it io n m et h o d. T h e c o ns ider a t io n t r a ns f er r ed in a b u s ines s c o m b ina t io n s h a l l b e m ea s u r ed a t f a ir v a l u e, w h ic h s h a l l b e c a l c u l a t ed a s t h e s u m o f t h e a c q u is it io n- da t e f a ir v a l u es o f t h e a s s et s t r a ns f er r ed b y t h e a c q u ir er , t h e l ia b il it ies a s s u m ed b y t h e a c q u ir er a nd t h e eq u it y int er es t s is s u ed b y t h e a c q u ir er . I n a ddit io n, o t h er expens e dir ec t l y c o nt r ib u t ed t o t h e a c q u is it io n is inc l u ded. T h e a c q u ir er s h a l l m ea s u r e t h e ident if ia b l e a s s et s a c q u ir ed f r o m b u s ines s c o m b ina t io n a nd t h e l ia b il it ies o r c o nt ing ent l ia b il it ies a s s u m ed a t t h eir a c q u is it io n- da t e f a ir v a l u es w it h o u t c o ns ider ing no n- c o nt r o l l ing int er es t . T h e a c q u ir er s h a l l r ec o g niz e g o o dw il l a s o f t h e a c q u is it io n da t e m ea s u r ed a s t h e exc es s o f t h e c o ns ider a t io n t r a ns f er r ed o v er t h e f a ir v a l u e o f net ident if ia b l e a s s et s h el d a c c o r ding t o h o l ding pr o po r t io n. Adv er s el y , t h e dif f er enc e m a y r es u l t in dir ec t l y r ec o g niz ing a g a in o n a pu r c h a s e.


2 5

S u b s eq u ent expendit u r e o f pr o per t y a nd eq u ipm ent s h a l l b e r ec o g niz ed a s a n a s s et o r b e inc l u ded in t h e c a r r y ing a m o u nt o f a s s et s , w h en, a nd o nl y w h en it is pr o b a b l e t h a t t h e f u t u r e ec o no m ic b enef it s t h a t a r e a s s o c ia t ed w it h pr o per t y a nd eq u ipm ent w il l f l o w t o t h e B a nk o r it s s u b s idia r ies , a nd t h e c o s t o f pr o per t y a nd eq u ipm ent c a n b e m ea s u r ed r el ia b l y . T h e c a r r y ing a m o u nt o f t h o s e pa r t s t h a t a r e r epl a c ed is der ec o g niz ed. A m a j o r im pr o v em ent o r r epa ir expens e t h a t c a n ext end t h e b enef it s o v er a f t er w a r d per io d is r eg a r ds a s c a pit a l expendit u r e; w h il e f r eq u ent m a int ena nc e o r r epa ir s a r e c h a r g ed t o c u r r ent expens es .

I f t h e B a nk a nd it s s u b s idia r ies h a v e o b l ig a t io ns t o dis m a nt l e, r em o v e a nd r es t o r e t h e pr o per t y a nd eq u ipm ent , t h e o b l ig a t io n f o r w h ic h t h e B a nk a nd it s s u b s idia r ies inc u r s eit h er w h en t h e it em is a c q u ir ed o r a s a c o ns eq u enc e o f h a v ing u s ed t h e it em du r ing a pa r t ic u l a r per io d s h a l l b e r ec o g niz ed a s t h e c o s t o f t h e pr o per t y a nd eq u ipm ent a s w el l a s l ia b il it y . D epr ec ia t io n is c o m pu t ed u s ing t h e s t r a ig h t - l ine m et h o d; t h e u s ef u l l iv es a r e c a l c u l a t ed b a s ed o n t h e no r m a l ec o no m ic l iv es . E a c h pa r t o f a n it em o f pr o per t y a nd eq u ipm ent w it h a c o s t t h a t is s ig nif ic a nt in r el a t io n t o t h e t o t a l c o s t o f t h e it em s h a l l b e depr ec ia t ed s epa r a t el y . T h e r es idu a l v a l u e a nd t h e u s ef u l l if e o f a n a s s et s h a l l b e r ev iew ed o r a deq u a t el y a dj u s t ed a t ea c h f ina nc ia l y ea r - end. U s ef u l l iv es o f m a j o r pr em is es a nd eq u ipm ent a r e a s f o l l o w s : B u il ding s a nd pr em is es 2 5 6 y ea r s T r a ns po r t a t io n eq u ipm ent 4 6 y ea r s M is c el l a neo u s eq u ipm ent 2 20 y ea r s T h e g a in o r l o s s a r is ing f r o m t h e dis po s it io n o f a n it em o f pr o per t y a nd eq u ipm ent s h a l l b e r ec o g niz ed in c u r r ent pr o f it o r l o s s a nd det er m ined a s t h e dif f er enc e b et w een t h e dis po s a l pr o c eeds a nd t h e c a r r y ing a m o u nt o f t h e it em .

( L ) I nt a ng ib l e a s s et s

( a ) C o m pu t er s o f t w a r e

C o m pu t er s o f t w a r e s y s t em expens es , w h ic h a r e r ec o r ded o n t h e b a s is o f t h e a c t u a l c o s t o f a c q u is it io n, a r e a m o r t iz ed u s ing a s t r a ig h t - l ine m et h o d o v er a per io d o f 3 t o 1 5 y ea r s . I t s a m o r t iz a t io n m et h o d, u s ef u l l if e a nd r es idu a l v a l u e a r e r ef er r ed t o t h e r eg u l a t io n o f pr o per t ies a nd eq u ipm ent . T h e B a nk a nd it s s u b s idia r ies u s e c o s t m o del t o pr o c eed s u b s eq u ent l y m ea s u r em ent .

( b ) G o o dw il l T h e B a nk a nd it s s u b s idia r ies a c c o u nt a b u s ines s c o m b ina t io n b y a ppl y ing t h e a c q u is it io n m et h o d. T h e c o ns ider a t io n t r a ns f er r ed in a b u s ines s c o m b ina t io n s h a l l b e m ea s u r ed a t f a ir v a l u e, w h ic h s h a l l b e c a l c u l a t ed a s t h e s u m o f t h e a c q u is it io n- da t e f a ir v a l u es o f t h e a s s et s t r a ns f er r ed b y t h e a c q u ir er , t h e l ia b il it ies a s s u m ed b y t h e a c q u ir er a nd t h e eq u it y int er es t s is s u ed b y t h e a c q u ir er . I n a ddit io n, o t h er expens e dir ec t l y c o nt r ib u t ed t o t h e a c q u is it io n is inc l u ded. T h e a c q u ir er s h a l l m ea s u r e t h e ident if ia b l e a s s et s a c q u ir ed f r o m b u s ines s c o m b ina t io n a nd t h e l ia b il it ies o r c o nt ing ent l ia b il it ies a s s u m ed a t t h eir a c q u is it io n- da t e f a ir v a l u es w it h o u t c o ns ider ing no n- c o nt r o l l ing int er es t . T h e a c q u ir er s h a l l r ec o g niz e g o o dw il l a s o f t h e a c q u is it io n da t e m ea s u r ed a s t h e exc es s o f t h e c o ns ider a t io n t r a ns f er r ed o v er t h e f a ir v a l u e o f net ident if ia b l e a s s et s h el d a c c o r ding t o h o l ding pr o po r t io n. Adv er s el y , t h e dif f er enc e m a y r es u l t in dir ec t l y r ec o g niz ing a g a in o n a pu r c h a s e.

26


2 6

G o o dw il l r el a t ing t o c a s h - g ener a t ing u nit s is t es t ed f o r im pa ir m ent per io dic a l l y ea c h y ea r . An im pa ir m ent l o s s is r ec o g niz ed w h en t h e r ec o v er a b l e a m o u nt is l es s t h a n t h e c a r r y ing a m o u nt . I m pa ir m ent l o s s es c a nno t b e r ev er s ed o nc e a n im pa ir m ent l o s s h a s b een r ec o g niz ed.

( M ) F o r ec l o s ed pr o per t ies F o r ec l o s ed pr o per t ies r ec eiv ed a r e s t a t ed a t a c q u ir ed c o s t , a nd t h e dif f er enc e b et w een it a nd t h e no m ina l v a l u e o f t h e o r ig ina l c l a im is r ef l ec t ed a s a c r edit l o s s . O n t h e b a l a nc e s h eet da t e, if t h e f o r ec l o s ed pr o per t ies r ec eiv ed a r e s t il l u ns o l d, t h ey s h a l l b e ev a l u a t ed a t t h e l o w er o f c a r r y ing a m o u nt a nd net f a ir m a r k et v a l u e. I f t h er e is s u f f ic ient ev idenc e indic a t ing t h a t t h e net f a ir m a r k et v a l u e is l o w er t h a n t h e c a r r y ing a m o u nt o f f o r ec l o s ed pr o per t ies , t h e dif f er enc e a f t er r ea s s es s m ent is a c c o u nt ed f o r u nder im pa ir m ent l o s s o n a s s et s . G a in o r l o s s o n dis po s a l o f f o r ec l o s ed pr o per t ies is r ec o g niz ed in c u r r ent pr o f it o r l o s s a s w el l .

( N ) P r o v is io ns T h e B a nk a nd it s s u b s idia r ies r ec o g niz e pr o v is io ns o nl y if a l l o f t h e f o l l o w ing c o ndit io ns a r e m et : ( a ) An ent it y h a s a pr es ent o b l ig a t io n, l eg a l o r c o ns t r u c t iv e, a s a r es u l t o f a pa s t ev ent ; ( b ) I t is pr o b a b l e t h a t a n o u t f l o w o f r es o u r c es em b o dy ing ec o no m ic b enef it s w il l b e

r eq u ir ed t o s et t l e t h e o b l ig a t io n; a nd

( c ) A r el ia b l e es t im a t e c a n b e m a de o f t h e a m o u nt o f t h e o b l ig a t io n. T h e B a nk a nd it s s u b s idia r ies s h a l l no t r ec o g niz e pr o v is io ns f o r f u t u r e o per a t ing l o s s es . W h er e t h er e a r e a nu m b er o f s im il a r o b l ig a t io ns t h e pr o b a b il it y t h a t a n o u t f l o w w il l b e r eq u ir ed in s et t l em ent is det er m ined b y c o ns ider ing t h e c l a s s o f o b l ig a t io ns a s a w h o l e. Al t h o u g h t h e l ik el ih o o d o f o u t f l o w f o r a ny o ne it em m a y b e s m a l l , it m a y w el l b e pr o b a b l e t h a t s o m e o u t f l o w o f r es o u r c es w il l b e needed t o s et t l e t h e c l a s s o f o b l ig a t io ns a s a w h o l e. I f t h a t is t h e c a s e, a pr o v is io n is r ec o g niz ed. T h e a m o u nt o f a pr o v is io n is m ea s u r ed s u b s eq u ent l y a s t h e pr es ent v a l u e o f t h e expendit u r es expec t ed t o b e r eq u ir ed t o s et t l e t h e o b l ig a t io n. T h e dis c o u nt r a t e is a pr e- t a x r a t e t h a t r ef l ec t s c u r r ent m a r k et a s s es s m ent s o f t h e t im e v a l u e o f m o ney a nd t h e r is k s s pec if ic t o t h e l ia b il it y . T h e def ic ienc y is r ec o g niz ed a s pr o f it o r l o s s o f t h e c u r r ent per io d.

( O ) R ev enu e r ec o g nit io n T h e B a nk a nd it s s u b s idia r ies ’ inc o m es a r e r ec o g niz ed o n a n a c c r u a l b a s is . P l ea s e r ef er t o N o t e 4 ( F ) ( a ) 4 . l o a ns a nd r ec eiv a b l es f o r m o r e inf o r m a t io n o n int er es t inc o m e f r o m r ec eiv a b l es a nd l o a ns .

27


2 7

( P ) E m pl o y ee b enef it ( a ) S h o r t - t er m em pl o y ee b enef it : T h e B a nk o r it s s u b s idia r ies expec t s t o s et t l e a l l s h o r t - t er m

no n- dis c o u nt ed b enef it s in t w el v e m o nt h s a f t er t h e end o f a nnu a l f ina nc ia l r epo r t ing da t e in w h ic h t h e s er v ic es a r e r ender ed b y em pl o y ees , a nd r ec o g niz e a s c u r r ent expens es .

( b ) P o s t - em pl o y m ent b enef it : T h e B a nk a nd it s s u b s idia r ies ’ pens io n pl a n c o m pr is es

def ined c o nt r ib u t io n pl a n a nd def ined b enef it pl a n.

1 . A def ined c o nt r ib u t io n pl a n is a po s t - em pl o y m ent b enef it pl a n u nder w h ic h t h e B a nk pa y s f ixed c o nt r ib u t io ns int o a s epa r a t e ent it y a nd w il l h a v e no l eg a l o r c o ns t r u c t iv e o b l ig a t io n t o pa y f u r t h er a m o u nt s . O b l ig a t io ns f o r c o nt r ib u t io ns t o def ined c o nt r ib u t io n pens io n pl a ns a r e r ec o g niz ed a s a n em pl o y ee b enef it expens e in pr o f it o r l o s s in t h e per io ds du r ing w h ic h s er v ic es a r e r ender ed b y em pl o y ees . P r epa id c o nt r ib u t io ns a r e r ec o g niz ed a s a n a s s et t o t h e ext ent t h a t a c a s h r ef u nd o r a r edu c t io n in f u t u r e pa y m ent s is a v a il a b l e. C o nt r ib u t io ns t o a def ined c o nt r ib u t io n pl a n t h a t is du e m o r e t h a n 1 2 m o nt h s a f t er t h e end o f t h e per io d in w h ic h t h e em pl o y ees r ender t h e s er v ic e a r e dis c o u nt ed t o t h eir pr es ent v a l u e.

2. A def ined b enef it pl a n is a po s t - em pl o y m ent b enef it pl a n u nder w h ic h b enef it is

pa id t o a n em pl o y ee o n t h e b a s is o f t h eir a g es , s er v ic e per io ds a nd c o m pens a t ed s a l a r ies a t t h e da t e o f r et ir em ent . T h e B a nk r ec o g niz es r em ea s u r em ent s o f t h e def ined b enef it pl a n w h ic h a r e inc u r r ed b y t h e c h a ng e o f a c t u a l exper ienc e a nd a c t u a r ia l a s s u m pt io n in o t h er c o m pr eh ens iv e inc o m e, a nd r ec o g niz e pens io n a s s et o r l ia b il it y in b a l a nc e s h eet in w h ic h a s s et o r l ia b il it y is t h e a m o u nt o f a c t u a r ia l pr es ent v a l u e o f def ined b enef it s o b l ig a t io n dedu c t ing f a ir v a l u e o f pl a n a s s et s . T h e c a l c u l a t io n o f def ined b enef it s o b l ig a t io n is per f o r m ed a nnu a l l y b y a n a c t u a r y u s ing t h e pr o j ec t ed u nit c r edit m et h o d. T h e a c t u a r ia l pr es ent v a l u e o f def ined b enef it s o b l ig a t io n is c a l c u l a t ed b y dis c o u nt ing f u t u r e c a s h f l o w a t t h e y iel d r a t e o n AA c r edit r a t ed b o nds t h a t h a v e m a t u r it y da t es a ppr o xim a t ing t h e t er m s o f t h e o b l ig a t io n a nd t h a t a r e deno m ina t ed in t h e s a m e c u r r enc y in w h ic h t h e b enef it s a r e expec t ed t o b e pa id. I n a c c o r da nc e w it h t h e a r t ic l e 3 0 o f t h e R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f F ina nc ia l R epo r t s b y P u b l ic B a nk ’ s , w h en t h e int er es t inc u r r ed f r o m r et ir ee depo s it s w it h f a v o r a b l e r a t es exc eed t h e int er es t g ener a t ed f r o m m a r k et r a t e, it s h o u l d b e c o ns ider ed t h e a c t u a r ia l a m o u nt a c c o r ding t o def ined b enef it pl a n r eg u l a t ed o n I AS 1 9 “ E m pl o y ee B enef it s ” s inc e t h e em pl o y ee’ s r et ir em ent da t e. O t h er w is e, t h e pa r a m et er o f a c t u a r ia l a s s u m pt io n o f c o m pet ent a u t h o r it y s h o u l d b e f o l l o w ed ( if h a v e) . T h e int er im a m o u nt o f def ine b enef it pl a n is det er m ined b a s ed o n t h e pens io n c o s t r a t e, w h ic h is t h e a c t u a r ia l r a t e a t t h e end o f l a s t f is c a l y ea r , a nd t h e a m o u nt , w h ic h is f r o m t h e b eg inning o f t h e y ea r t o t h e end o f c u r r ent per io d. I n a ddit io n, a n a dj u s t m ent w o u l d b e m a de if s ig nif ic a nt m a r k et f l u c t u a t io n, s ig nif ic a nt dec r ea s e, pa y - o f f o r o t h er s ig nif ic a nt o ne- t im e ev ent o c c u r s a f t er t h e end o f per io d.

3 . T h e def ined c o nt r ib u t io n pl a n o f o v er s ea s u nit is in a c c o r da nc e w it h r es pec t iv e

a u t h o r it ies ’ r eg u l a t io n.

28


2 8

( c ) T er m ina t io n b enef it s : T er m ina t io n b enef it s a r e inc u r r ed w h en t h e B a nk o r it s s u b s idia r ies t er m ina t e em pl o y m ent pr io r t o q u a l if y ing f o r r et ir em ent , o r t h e em pl o y ees a c c ept ed v o l u nt a r y r edu nda nc y t o g et t er m ina t io n b enef it s in r et u r n. T er m ina t io n b enef it s a r e r ec o g niz ed a s a l ia b il it y w h en t h e B a nk a nd it s s u b s idia r ies a r e c o m m it t ed dem o ns t r a b l y , w it h o u t r ea l is t ic po s s ib il it y o f w it h dr a w a l , t o a f o r m a l det a il ed pl a n t o pr o v ide t er m ina t io n b enef it s o r m a k e a n o f f er o f t er m ina t io n b enef it s t o enc o u r a g e v o l u nt a r y r edu nda nc y . T er m ina t io n b enef it s a r e pa y a b l e m o r e t h a n 1 2 m o nt h s a f t er t h e r epo r t ing per io d, t h en t h ey a r e dis c o u nt ed t o t h eir pr es ent v a l u e.

( Q ) S h a r e b a s ed pa y m ent t r a ns a c t io ns

T h e B a nk ’ s a c c o u nt ing t r ea t m ent s o f s h a r e- b a s ed pa y m ent a r e a s b el o w . ( a ) E q u it y - s et t l ed s h a r e- b a s ed pa y m ent s a r e m ea s u r ed a t f a ir v a l u e a t t h e da t e o f g r a nt . T h e

f a ir v a l u e det er m ined a t t h e g r a nt da t e o f t h e eq u it y - s et t l ed s h a r e- b a s ed pa y m ent s is expens ed o v er t h e v es t ing per io d, a nd t h e c o r r es po nding inc r ea s e in o w ner s ’ eq u it y is r ec o g niz ed. T h e v es t ing per io d is es t im a t ed b a s ed o n t h e u l t im a t e v es t ing c o ndit io ns t h a t m u s t b e s a t is f ied. T h e v es t ing c o ndit io ns inc l u de s er v ic e c o ndit io ns a nd per f o r m a nc e c o ndit io ns , inc l u ding m a r k et c o ndit io ns . I n v a l u ing eq u it y - s et t l ed pa y m ent s , no a c c o u nt is t a k en o f a ny v es t ing c o ndit io ns o t h er t h a n m a r k et c o ndit io ns .

( b ) F o r c a s h - s et t l ed s h a r e- b a s ed pa y m ent t r a ns a c t io ns , a l ia b il it y eq u a l t o t h e po r t io n o f t h e

g o o ds o r s er v ic es r ec eiv ed is r ec o g niz ed a t it s c u r r ent f a ir v a l u e det er m ined a t ea c h b a l a nc e s h eet da t e a nd a t t h e da t e o f s et t l em ent , w it h a ny c h a ng es in t h e f a ir v a l u e r ec o g niz ed in pr o f it o r l o s s o f t h e per io d.

( c ) F a ir v a l u e o f t h e s h a r e o pt io ns a t t h e g r a nt da t e is m ea s u r ed w it h t h e u s e o f a n o pt io n

pr ic ing m o del b a s ed o n m a na g em ent ’ s b es t es t im a t e o f t h e exer c is e pr ic e, expec t ed t er m , u nder l y ing s h a r e pr ic e, expec t ed v o l a t il it y , expec t ed div idend y iel d, r is k - f r ee int er es t r a t e, a nd a ny o t h er inpu t s t o t h e m o del .

( R ) C o m pens a t io ns o f em pl o y ees a nd dir ec t o r s

T h e B a nk ’ s em pl o y ees ’ a nd dir ec t o r s ’ ( inc l u ding independent dir ec t o r s ) c o m pens a t io ns a r e r ec o g niz ed a s per s o nnel expens e. Any dif f er enc e l ies b et w een t h e a c t u a l a l l o c a t io n a m o u nt a nd pr ev io u s l y r ec o g niz ed in t h e f ina nc ia l r epo r t is c o ns ider ed a s c h a ng e in a c c o u nt ing es t im a t es w h ic h is t h en r ec o g niz ed a s pr o f it o r l o s s in next y ea r .

( S ) I nc o m e t a xes I nc o m e t a x expens es inc l u de b o t h c u r r ent t a xes a nd def er r ed t a xes . E xc ept f o r expens es r el a t ed t o b u s ines s c o m b ina t io ns o r r ec o g niz ed dir ec t l y in eq u it y o r o t h er c o m pr eh ens iv e inc o m e, a l l c u r r ent a nd def er r ed t a xes s h a l l b e r ec o g niz ed in pr o f it o r l o s s . C u r r ent t a xes inc l u de t a x pa y a b l es a nd t a x dedu c t io n r ec eiv a b l es o n t a xa b l e g a ins ( l o s s es ) f o r t h e y ea r c a l c u l a t ed u s ing t h e s t a t u t o r y t a x r a t e o n t h e r epo r t ing da t e o r t h e a c t u a l l eg is l a t iv e t a x r a t e, a s w el l a s t a x a dj u s t m ent s r el a t ed t o pr io r y ea r s . I nc o m e t a x expens e is m ea s u r ed b y int er im r epo r t ing per io d net inc o m e b ef o r e t a x m u l t ipl ied b y b es t es t im a t e ef f ec t iv e a nnu a l t a x r a t e. And t h e b es t es t im a t e ef f ec t iv e a nnu a l t a x r a t e is det er m ined b y t h e m a na g em ent . D ef er r ed t a xes a r is e du e t o t em po r a r y dif f er enc es b et w een t h e c a r r y ing a m o u nt s o f a s s et s a nd l ia b il it ies f o r f ina nc ia l r epo r t ing pu r po s es a nd t h eir r es pec t iv e t a x b a s es . D ef er r ed t a x a s s et s


2 8

( c ) T er m ina t io n b enef it s : T er m ina t io n b enef it s a r e inc u r r ed w h en t h e B a nk o r it s s u b s idia r ies t er m ina t e em pl o y m ent pr io r t o q u a l if y ing f o r r et ir em ent , o r t h e em pl o y ees a c c ept ed v o l u nt a r y r edu nda nc y t o g et t er m ina t io n b enef it s in r et u r n. T er m ina t io n b enef it s a r e r ec o g niz ed a s a l ia b il it y w h en t h e B a nk a nd it s s u b s idia r ies a r e c o m m it t ed dem o ns t r a b l y , w it h o u t r ea l is t ic po s s ib il it y o f w it h dr a w a l , t o a f o r m a l det a il ed pl a n t o pr o v ide t er m ina t io n b enef it s o r m a k e a n o f f er o f t er m ina t io n b enef it s t o enc o u r a g e v o l u nt a r y r edu nda nc y . T er m ina t io n b enef it s a r e pa y a b l e m o r e t h a n 1 2 m o nt h s a f t er t h e r epo r t ing per io d, t h en t h ey a r e dis c o u nt ed t o t h eir pr es ent v a l u e.

( Q ) S h a r e b a s ed pa y m ent t r a ns a c t io ns

T h e B a nk ’ s a c c o u nt ing t r ea t m ent s o f s h a r e- b a s ed pa y m ent a r e a s b el o w . ( a ) E q u it y - s et t l ed s h a r e- b a s ed pa y m ent s a r e m ea s u r ed a t f a ir v a l u e a t t h e da t e o f g r a nt . T h e

f a ir v a l u e det er m ined a t t h e g r a nt da t e o f t h e eq u it y - s et t l ed s h a r e- b a s ed pa y m ent s is expens ed o v er t h e v es t ing per io d, a nd t h e c o r r es po nding inc r ea s e in o w ner s ’ eq u it y is r ec o g niz ed. T h e v es t ing per io d is es t im a t ed b a s ed o n t h e u l t im a t e v es t ing c o ndit io ns t h a t m u s t b e s a t is f ied. T h e v es t ing c o ndit io ns inc l u de s er v ic e c o ndit io ns a nd per f o r m a nc e c o ndit io ns , inc l u ding m a r k et c o ndit io ns . I n v a l u ing eq u it y - s et t l ed pa y m ent s , no a c c o u nt is t a k en o f a ny v es t ing c o ndit io ns o t h er t h a n m a r k et c o ndit io ns .

( b ) F o r c a s h - s et t l ed s h a r e- b a s ed pa y m ent t r a ns a c t io ns , a l ia b il it y eq u a l t o t h e po r t io n o f t h e

g o o ds o r s er v ic es r ec eiv ed is r ec o g niz ed a t it s c u r r ent f a ir v a l u e det er m ined a t ea c h b a l a nc e s h eet da t e a nd a t t h e da t e o f s et t l em ent , w it h a ny c h a ng es in t h e f a ir v a l u e r ec o g niz ed in pr o f it o r l o s s o f t h e per io d.

( c ) F a ir v a l u e o f t h e s h a r e o pt io ns a t t h e g r a nt da t e is m ea s u r ed w it h t h e u s e o f a n o pt io n

pr ic ing m o del b a s ed o n m a na g em ent ’ s b es t es t im a t e o f t h e exer c is e pr ic e, expec t ed t er m , u nder l y ing s h a r e pr ic e, expec t ed v o l a t il it y , expec t ed div idend y iel d, r is k - f r ee int er es t r a t e, a nd a ny o t h er inpu t s t o t h e m o del .

( R ) C o m pens a t io ns o f em pl o y ees a nd dir ec t o r s

T h e B a nk ’ s em pl o y ees ’ a nd dir ec t o r s ’ ( inc l u ding independent dir ec t o r s ) c o m pens a t io ns a r e r ec o g niz ed a s per s o nnel expens e. Any dif f er enc e l ies b et w een t h e a c t u a l a l l o c a t io n a m o u nt a nd pr ev io u s l y r ec o g niz ed in t h e f ina nc ia l r epo r t is c o ns ider ed a s c h a ng e in a c c o u nt ing es t im a t es w h ic h is t h en r ec o g niz ed a s pr o f it o r l o s s in next y ea r .

( S ) I nc o m e t a xes I nc o m e t a x expens es inc l u de b o t h c u r r ent t a xes a nd def er r ed t a xes . E xc ept f o r expens es r el a t ed t o b u s ines s c o m b ina t io ns o r r ec o g niz ed dir ec t l y in eq u it y o r o t h er c o m pr eh ens iv e inc o m e, a l l c u r r ent a nd def er r ed t a xes s h a l l b e r ec o g niz ed in pr o f it o r l o s s . C u r r ent t a xes inc l u de t a x pa y a b l es a nd t a x dedu c t io n r ec eiv a b l es o n t a xa b l e g a ins ( l o s s es ) f o r t h e y ea r c a l c u l a t ed u s ing t h e s t a t u t o r y t a x r a t e o n t h e r epo r t ing da t e o r t h e a c t u a l l eg is l a t iv e t a x r a t e, a s w el l a s t a x a dj u s t m ent s r el a t ed t o pr io r y ea r s . I nc o m e t a x expens e is m ea s u r ed b y int er im r epo r t ing per io d net inc o m e b ef o r e t a x m u l t ipl ied b y b es t es t im a t e ef f ec t iv e a nnu a l t a x r a t e. And t h e b es t es t im a t e ef f ec t iv e a nnu a l t a x r a t e is det er m ined b y t h e m a na g em ent . D ef er r ed t a xes a r is e du e t o t em po r a r y dif f er enc es b et w een t h e c a r r y ing a m o u nt s o f a s s et s a nd l ia b il it ies f o r f ina nc ia l r epo r t ing pu r po s es a nd t h eir r es pec t iv e t a x b a s es . D ef er r ed t a x a s s et s

29


2 9

a nd l ia b il it ies s h a l l b e m ea s u r ed a t t h e t a x r a t es t h a t a r e expec t ed t o a ppl y t o t h e per io d w h en t h e a s s et is r ea l iz ed o r t h e l ia b il it y is s et t l ed, b a s ed o n t a x r a t es t h a t h a v e b een ena c t ed o r s u b s t a nt iv el y ena c t ed b y t h e end o f t h e r epo r t ing per io d. D ef er r ed t a x a s s et s a nd l ia b il it ies m a y b e o f f s et a g a ins t ea c h o t h er if t h e f o l l o w ing c r it er ia a r e m et b y t h e B a nk a nd it s s u b s idia r ies :

( a ) T h e ent it y h a s t h e l eg a l r ig h t t o s et t l e t a x a s s et s a nd l ia b il it ies o n a net b a s is ; a nd ( b ) T h e def er r ed t a x a s s et s a nd t h e def er r ed t a x l ia b il it ies r el a t e t o inc o m e t a xes l ev ied b y

t h e s a m e t a xa t io n a u t h o r it y o n eit h er : 1 . L ev ied b y t h e s a m e t a xing a u t h o r it y ; o r 2. L ev ied b y dif f er ent t a xing a u t h o r it ies , b u t w h er e ea c h s u c h a u t h o r it y int ends t o

s et t l e t a x a s s et s a nd l ia b il it ies ( w h er e s u c h a m o u nt s a r e s ig nif ic a nt ) o n a net b a s is ev er y y ea r o f t h e per io d o f expec t ed a s s et r ea l iz a t io n o r deb t l iq u ida t io n, o r w h er e t h e t im ing o f a s s et r ea l iz a t io n a nd deb t l iq u ida t io n is m a t c h ed.

A def er r ed t a x a s s et s h o u l d b e r ec o g niz ed f o r t h e c a r r y - f o r w a r d o f u nu s ed t a x l o s s es , u nu s ed t a x c r edit s , a nd dedu c t ib l e t em po r a r y dif f er enc es t o t h e ext ent t h a t it is pr o b a b l e t h a t f u t u r e t a xa b l e pr o f it w il l b e a v a il a b l e a g a ins t w h ic h t h e u nu s ed t a x l o s s es , u nu s ed t a x c r edit s , a nd dedu c t ib l e t em po r a r y dif f er enc es c a n b e u t il iz ed. S u c h u nu s ed t a x l o s s es , u nu s ed t a x c r edit s , a nd dedu c t ib l e t em po r a r y dif f er enc es s h a l l a l s o b e r e- ev a l u a t ed ev er y y ea r o n t h e f ina nc ia l r epo r t ing da t e, a nd a dj u s t ed b a s ed o n t h e pr o b a b il it y t h a t f u t u r e t a xa b l e pr o f it w il l b e a v a il a b l e a g a ins t w h ic h t h e u nu s ed t a x l o s s es , u nu s ed t a x c r edit s , a nd dedu c t ib l e t em po r a r y dif f er enc es c a n b e u t il iz ed.

As a s u b s idia r y o f C T B C F ina nc ia l H o l ding C o . , L t d. , t h e B a nk f il es a c o ns o l ida t ed c o r po r a t e inc o m e t a x r et u r n w it h it s pa r ent c o m pa ny a nd it s s u b s idia r ies . T h e dif f er enc e b et w een t h e c o ns o l ida t ed inc o m e t a x a nd t h e B a nk ’ s o r dina r y inc o m e t a x is a dj u s t ed a t t h e pa r ent - c o m pa ny l ev el , a nd t h e B a nk r ec o g niz es s u c h dif f er enc e a s pa y a b l es o r r ec eiv a b l es . T h e B a nk ’ s 1 0 % s u r t a x o n u ndis t r ib u t ed ea r ning s is r ec o r ded a s c u r r ent expens e o n t h e da t e o f t h e r es o l u t io n o f t h e b o a r d o f dir ec t o r s o n b eh a l f o f s t o c k h o l der s ’ m eet ing f o r dec l a r ing t h e dis t r ib u t io n o f ea r ning s .

( T ) C o nt ing ent l ia b il it ies

A c o nt ing ent l ia b il it y is def ined a s a po s s ib l e o b l ig a t io n t h a t a r is es f r o m pa s t ev ent s a nd w h o s e exis t enc e w il l b e c o nf ir m ed o nl y b y t h e o c c u r r enc e o r no n- o c c u r r enc e o f o ne o r m o r e u nc er t a in f u t u r e ev ent s no t w h o l l y w it h in t h e c o nt r o l o f t h e B a nk o r it s s u b s idia r ies ; o r a pr es ent o b l ig a t io n t h a t a r is es f r o m pa s t ev ent s b u t is no t r ec o g niz ed b ec a u s e it is no t pr o b a b l e t h a t a n o u t f l o w o f r es o u r c es em b o dy ing ec o no m ic b enef it s w il l b e r eq u ir ed t o s et t l e t h e o b l ig a t io n o r t h e a m o u nt o f t h e o b l ig a t io n c a nno t b e m ea s u r ed w it h s u f f ic ient r el ia b il it y . T h e B a nk a nd it s s u b s idia r ies s h a l l no t r ec o g niz e a c o nt ing ent l ia b il it y ; ins t ea d, c o nt ing ent l ia b il it y s h a l l b e a ppr o pr ia t el y dis c l o s ed.

30


30

( U ) O per a t ing s eg m ent s An o per a t ing s eg m ent is a c o m po nent o f t h e B a nk a nd it s s u b s idia r ies t h a t eng a g es in b u s ines s a c t iv it ies f r o m w h ic h it m a y ea r n r ev enu es a nd inc u r expens es ( inc l u ding r ev enu es a nd expens es r el a t ing t o t r a ns a c t io ns w it h o t h er c o m po nent s o f t h e B a nk a nd it s s u b s idia r ies ) . T h e s eg m ent ’ s o per a t ing r es u l t s a r e r ev iew ed r eg u l a r l y b y t h e B a nk ’ s c h ief o per a t ing dec is io n m a k er t o m a k e dec is io ns a b o u t r es o u r c es t o b e a l l o c a t ed t o t h e s eg m ent a nd a s s es s it s per f o r m a nc e f o r w h ic h dis c r et e f ina nc ia l inf o r m a t io n is a v a il a b l e. T h e pr im e r es po ns ib il it y o f t h e B a nk ’ s pa r ent c o m pa ny C T B C F ina nc ia l H o l ding C o . , L t d. is t h e m a na g em ent o f it s s u b s idia r ies , w h o s e o per a t io na l per f o r m a nc e a nd r es o u r c e a l l o c a t io n a r e exec u t ed u nder b o a r d a ppr o v a l o f t h e pa r ent c o m pa ny . T h e B a nk a nd c o m po nent s u b s idia r ies per io dic a l l y r epo r t a c t u a l f ina nc ia l r es u l t s t o t h e G r o u p’ s M a na g em ent B o a r d, a nd t h er eb y l ea ding t o it s r o l e a s t h e c h ief o per a t ing dec is io n m a k er .

5. P RIMARY SOURCES OF SIG NIFICANT ACCOUNTING J UDG MENTS, ESTIMATES AND ASSUMP TIONS UNCERTAINTY W h en pr epa r ing t h e c o ns o l ida t ed f ina nc ia l r epo r t s , t h e m a na g em ent needs t o m a k e j u dg m ent s , es t im a t es , a nd a s s u m pt io ns t h a t a f f ec t t h e a do pt io n o f a c c o u nt ing po l ic ies , r epo r t ed a m o u nt s o f a s s et s , l ia b il it ies , r ev enu es , a nd expens es . Ac t u a l r es u l t s c o u l d dif f er f r o m t h es e es t im a t es . C o nt inu o u s l y ev a l u a t io n o f es t im a t es a nd a s s u m pt io n s h o u l d b e m a de b y t h e m a na g em ent . A c h a ng e o f a c c o u nt ing es t im a t e s h o u l d b e r ec o g niz ed in t h e per io d w h en it inc u r s a nd in t h e a f f ec t ed f u t u r e per io ds . P l ea s e r ef er t o t h e f o l l o w ing f o r a c c o u nt ing po l ic ies a nd m a na g em ent j u dg m ent s f o r c er t a in a c c o u nt it em s h a v e s ig nif ic a nt im pa c t s o n f ina nc ia l r epo r t s o f t h e B a nk a nd it s s u b s idia r ies a nd a ny inf o r m a t io n a b o u t a ny es t im a t e a nd a s s u m pt io n t h a t a r e u nc er t a in, h a v e s ig nif ic a nt r is k a nd m a y h a v e s ig nif ic a nt im pa c t o n t h e f o l l o w ing y ea r . ( A) I m pa ir m ent l o s s o n l o a ns

W h en t h e B a nk a nd it s s u b s idia r ies dec ide w h et h er t o r ec o g niz e im pa ir m ent l o s s , t h ey m a inl y a s s es s if t h er e a r e a ny o b s er v a b l e ev idenc e indic a t ing po s s ib l e im pa ir m ent . T h e ev idenc e m a y inc l u de o b s er v a b l e inf o r m a t io n indic a t ing u nf a v o r a b l e c h a ng es in deb t o r pa y m ent s t a t u s , o r s o v er eig n o r l o c a l ec o no m ic s it u a t io n r el a t ed t o deb t pa y m ent in a r r ea r s . W h en a na l y z ing expec t ed c a s h f l o w , t h e es t im a t es b y t h e m a na g em ent a r e b a s ed o n pa s t l o s s es exper ienc e o n a s s et s o f s im il a r c r edit r is k c h a r a c t er is t ic s . T h e B a nk a nd it s s u b s idia r ies per io dic a l l y r ev iew m et h o ds a nd a s s u m pt io ns b eh ind t h e a m o u nt a nd s c h edu l e o f expec t ed c a s h f l o w , t o r edu c e t h e dif f er enc e b et w een expec t ed a nd a c t u a l l o s s . P l ea s e r ef er t o N o t e 6 ( I ) f o r im pa ir m ent l o s s o n l o a ns .

( B ) P o s t - em pl o y m ent b enef it s

T h e pr es ent v a l u e o f po s t - em pl o y m ent b enef it s o b l ig a t io n is b a s ed o n a c t u a r ia l r es u l t s o f m u l t ipl e a s s u m pt io ns . Any a s s u m pt io n c h a ng es w il l a f f ec t t h e c a r r y ing a m o u nt o f po s t - em pl o y m ent b enef it s o b l ig a t io n.

31


31

T h e a s s u m pt io ns t h a t det er m ine net pens io n c o s t ( r ev enu e) inc l u de dis c o u nt r a t e. T h e B a nk a nd it s s u b s idia r ies det er m ine a n a ppr o pr ia t e dis c o u nt r a t e a t t h e end o f ea c h y ea r , a nd u s e t h e dis c o u nt r a t e t o c a l c u l a t e t h e pr es ent v a l u e o f f u t u r e c a s h o u t f l o w needed t o c o v er t h e po s t - em pl o y m ent b enef it s o b l ig a t io n. T o det er m ine a n a ppr o pr ia t e dis c o u nt r a t e, t h e B a nk a nd it s s u b s idia r ies s h o u l d t a k e int o a c c o u nt t h e int er es t r a t e o f h ig h - q u a l it y c o r po r a t e b o nd o r g o v er nm ent b o nd, w h ic h s h o u l d b e is s u ed in t h e s a m e c u r r enc y a s t h a t o f po s t - em pl o y m ent b enef it s pa y m ent s . T h e m a t u r it y o f t h e b o nds s h o u l d m a t c h t h a t o f pens io n l ia b il it y . O t h er s ig nif ic a nt a s s u m pt io ns o f po s t - em pl o y m ent b enef it s o b l ig a t io n a r e b a s ed o n c u r r ent m a r k et c o ndit io ns . P l ea s e r ef er t o N o t e 6 ( AA) .

( C ) F a ir v a l u e

T h e B a nk a nd it s s u b s idia r ies h o l d c er t a in f ina nc ia l ins t r u m ent s w it h o u t a c t iv e m a r k et s , inc l u ding f ina nc ia l ins t r u m ent s l a c k ing a c t iv e m a r k et q u o t es a nd f ina nc ia l ins t r u m ent s t h a t t u r ned o u t t o b e ina c t iv e du e t o m a r k et c o ndit io ns ( e. g . , l o w m a r k et l iq u idit y ) . W h en a m a r k et is ina c t iv e, t h er e a r e u s u a l l y o nl y a f ew o r no o b s er v a b l e m a r k et da t a a v a il a b l e t o m ea s u r e t h e f a ir v a l u e o f f ina nc ia l ins t r u m ent s . D et er m ina t io n o f t h e exis t enc e o f a n a c t iv e m a r k et f o r a f ina nc ia l ins t r u m ent r eq u ir es m a na g em ent ’ s j u dg m ent . I f t h e m a r k et f o r a n inv es t m ent h el d b y t h e B a nk a nd it s s u b s idia r ies a r e no t a c t iv e, t h e f a ir v a l u e o f t h e ins t r u m ent is det er m ined u s ing v a l u a t io n t ec h niq u es . T h e B a nk a nd it s s u b s idia r ies u s e q u o t es f r o m independent t h ir d pa r t ies o r pr ic es der iv ed f r o m int er na l l y dev el o ped m o del s t o det er m ine t h e f a ir v a l u e o f t h o s e f ina nc ia l ins t r u m ent s . W h en t h e f a ir v a l u e m a y b e pu b l ic l y o b t a ined f r o m independent s o u r c es , it s h a l l b e a do pt ed f ir s t . O v er a l l , t h e B a nk a nd it s s u b s idia r ies w o u l d dec ide a s o u r c e o r a t ec h niq u e a s a f a ir v a l u e det er m ina t io n m et h o d t h a t c a n r ef l ec t t h e pr ic e a c h iev ed b et w een m a r k et pa r t ic ipa nt s t h r o u g h r eg u l a r t r a ding a s o f t h e r epo r t ing da t e. V a l u a t io n t ec h niq u es inc l u de a do pt io n o f r ec ent a r m ’ s - l eng t h t r a ns a c t io ns , r ef er enc e t o o t h er ins t r u m ent s w it h a s u b s t a nt ia l l y ident ic a l b a s is , a ppl ic a t io n o f dis c o u nt ed c a s h f l o w a na l y s is , et c . , w h ic h m a y a l s o inc l u de a nu m b er o f a s s u m pt io ns r el a t ed t o ea c h v a r ia b l e ( s u c h a s c r edit r is k a nd int er es t r a t e) . Ado pt io n o f dif f er ent v a l u a t io n t ec h niq u es o r a s s u m pt io ns m a y l ea d t o s ig nif ic a nt dis c r epa nc ies in f a ir v a l u e det er m ina t io n r es u l t s . P l ea s e r ef er t o no t e 6 ( AO ) f o r t h e es t im a t ed f a ir v a l u e o f t h e a b o v e f ina nc ia l ins t r u m ent s .

6. SUMMARY OF MAJ OR ACCOUNTS

( A) C a s h a nd c a s h eq u iv a l ent s

December 31, 2015 December 31, 2014 C a s h o n h a nd $ 26 , 1 0 9 , 29 3 24 , 3 5 3 , 0 4 8 P et t y c a s h a nd r ev o l v ing f u nd 23 , 7 9 2 1 2, 4 5 8 C h ec k s f o r c l ea r a nc e 2, 27 6 , 8 1 6 3 , 7 3 1 , 8 0 6 C a s h in t r a ns it 9 , 6 4 8 , 3 7 5 1 0 , 8 1 1 , 6 6 2 D u e f r o m o t h er b a nk s 4 3 , 1 4 5 , 6 1 4 7 0 , 1 21 , 1 8 5 T o t a l $ 81,203,890 109,030,159

32


32

( B ) D u e f r o m C ent r a l B a nk a nd c a l l l o a ns t o b a nk

December 31, 2015 December 31, 2014 R eq u ir ed r es er v e— Ac c o u nt A $ 6 5 , 3 4 8 , 6 9 4 3 1 , 3 21 , 8 1 8 R eq u ir ed r es er v e— Ac c o u nt B 4 4 , 9 0 7 , 25 1 3 8 , 1 0 9 , 4 4 1 R eq u ir ed r es er v e— F o r eig n C u r r enc y 1 6 5 , 3 3 0 - D u e f r o m C ent r a l B a nk 1 5 3 , 0 8 4 , 5 9 8 1 0 1 , 3 7 5 , 0 6 1 C a l l l o a ns t o b a nk s 1 3 8 , 5 0 0 , 1 3 0 1 0 3 , 4 8 6 , 0 8 2 T o t a l $ 402,006,003 274,292,402

T h e r es er v es f o r depo s it s a r e c a l c u l a t ed a t pr es c r ib ed r a t es , u s ing t h e a v er a g e m o nt h l y b a l a nc es o f v a r io u s depo s it a c c o u nt s , a nd a r e a ppr o pr ia t ed a nd depo s it ed in t h e r es er v e a c c o u nt o f t h e C ent r a l B a nk o f t h e R epu b l ic o f C h ina ( T a iw a n) . D epo s it s in “ R eq u ir ed r es er v e－Ac c o u nt A” a r e int er es t - f r ee a nd c a n b e w it h dr a w n a t a ny t im e; depo s it s in “ R eq u ir ed r es er v e－Ac c o u nt B ” a r e int er es t - b ea r ing a nd c a nno t b e w it h dr a w n exc ept f o r t h e m o nt h l y a dj u s t m ent t o t h e r eq u ir ed r es er v e per m it t ed b y r el ev a nt r eg u l a t io ns .

P a r t s o f t h e a b o v e du e f r o m C ent r a l B a nk a nd c a l l l o a ns t o b a nk s a r e r es t r ic t ed, a nd pl ea s e r ef er t o N o t e 8 f o r f u r t h er det a il s .

( C ) F ina nc ia l ins t r u m ent s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s T h e f ina nc ia l a s s et s h el d f o r t r a ding a nd t h e f ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it a nd l o s s u po n des ig na t io n b y t h e B a nk a nd it s s u b s idia r ies w er e a s f o l l o w s : December 31, 2015 December 31, 2014 F ina nc ia l a s s et s h el d f o r t r a ding C o m m er c ia l pa per $ 4 6 , 4 5 6 , 1 6 9 3 0 , 4 8 9 , 6 8 6 T r ea s u r y b il l s - 7 6 , 3 6 1 G o v er nm ent b o nds 6 6 7 , 9 4 7 2, 9 5 9 , 4 6 2 C o r po r a t e b o nds 3 7 3 - C o nv er t ib l e b o nds 3 , 8 4 4 , 5 29 4 , 7 0 1 , 6 4 7 L is t ed a nd O T C s ec u r it ies 3 0 6 , 1 8 3 1 5 5 , 1 4 5 B enef ic ia r y c er t if ic a t es 3 2, 7 8 3 26 5 , 26 6 D er iv a t iv e f ina nc ia l a s s et s 8 1 , 1 0 5 , 5 1 2 5 7 , 7 0 9 , 7 20 V a l u a t io n a dj u s t m ent o f f ina nc ia l a s s et s 8 1 , 0 22 28 5 , 9 4 5 S u b t o t a l 1 3 2, 4 9 4 , 5 1 8 9 6 , 6 4 3 , 23 2 D es ig na t ed a s f ina nc ia l a s s et s m ea s u r ed a t f a ir

v a l u e t h r o u g h pr o f it o r l o s s

C o r po r a t e b o nds 6 , 7 8 7 , 7 8 2 6 , 5 4 7 , 7 0 5 L is t ed a nd O T C s ec u r it ies - 2, 8 0 4 , 7 7 2 O t h er s ec u r it ies a nd b o nds 1 , 3 0 4 , 8 25 2, 28 4 , 23 4 V a l u a t io n a dj u s t m ent o f f ina nc ia l a s s et s 1 4 , 9 9 8 1 20 , 3 1 1 S u b t o t a l 8 , 1 0 7 , 6 0 5 1 1 , 7 5 7 , 0 22 T o t a l $ 140,602,123 108,400,254

P l ea s e r ef er t o N o t es 6 ( T ) f o r inf o r m a t io n w it h r eg a r d t o t h e r epu r c h a s e c o ndit io ns f o r f ina nc ia l a s s et s h el d f o r t r a ding s h o w n a b o v e.

33


33

F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s o f t h e B a nk a nd it s s u b s idia r ies w er e a s f o l l o w s : December 31, 2015 December 31, 2014 D er iv a t iv e f ina nc ia l l ia b il it ies $ 8 8 , 9 0 9 , 223 6 2, 5 5 6 , 0 0 8 F ina nc ia l l ia b il it ies des ig na t ed a t f a ir v a l u e t h r o u g h pr o f it o r

l o s s 3 8 , 6 8 3 , 3 5 5 3 0 , 26 0 , 23 9

T o t a l $ 127,592,578 92,816,247

T h e a f o r em ent io ned f ina nc ia l l ia b il it ies des ig na t ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s w er e is s u ed b y t h e B a nk , w it h t h e r el a t ed t er m s a nd c o ndit io ns dis c l o s ed in N o t e 6 ( W ) . T h e a m o u nt s o f f a ir v a l u e a nd it s c h a ng es w h ic h a r e a t t r ib u t a b l e t o c h a ng es in t h e c r edit r is k w er e a s f o l l o w s : December 31, 2015 December 31, 2014 F ina nc ia l deb ent u r es a t f a ir v a l u e $ 3 8 , 6 8 3 , 3 5 5 3 0 , 26 0 , 23 9

C u m u l a t iv e c h a ng es in f a ir v a l u e t h a t is a t t r ib u t a b l e t o c h a ng es in t h e c r edit r is k

( 1 , 6 1 4 , 7 4 1 ) ( 4 6 4 , 0 1 2)

T h e dif f er enc e b et w een b o o k v a l u e a nd t h e a m o u nt pa y a b l e u po n m a t u r it y a s s pec if ied in t h e c o nt r a c t

5 , 9 5 5 , 7 4 5 2, 5 0 4 , 4 5 5

T h e B a nk a s s es s es c h a ng es in f a ir v a l u e t h a t is no t a t t r ib u t a b l e t o c h a ng es in m a r k et c o ndit io ns t h a t g iv e r is e t o c r edit r is k b y ev a l u a t ing c h a ng es in f a ir v a l u e. F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h er e is no t r a ns f er o f t h e c u m u l a t iv e g a in o r l o s s w it h in eq u it y . T h e f a ir v a l u e o f t h e c a l l a b l e f ina nc ia l l ia b il it ies is s u ed b y t h e B a nk is ev a l u a t ed b a s ed o n t h e int er na l ev a l u a t io n m et h o d, w it h ev a l u a t io n pa r a m et er s r et r iev ed f r o m u no b s er v a b l e m a r k et . I n c o ns ider a t io n o f t h e dis c r epa nc y b et w een ev a l u a t ed pr ic e a nd t r a ns a c t io n pr ic e, t h e B a nk h a s r ec o g niz ed r es er v e f o r da y o ne pr o f it s . T h e c h a ng es in r es er v e f o r da y o ne pr o f it s w er e a s f o l l o w s For the year ended December 31 2015 2014 J anu ary 1 $ 2, 7 5 2, 0 6 8 -

C u r r ent is s u a nc e o f deb ent u r es 1 , 4 4 7 , 5 1 0 2, 8 21 , 1 29 C u r r ent a m o r t iz a t io n ( 8 8 4 , 7 8 6 ) ( 1 4 1 , 4 9 1 ) F o r eig n exc h a ng e g a ins 1 6 5 , 9 1 1 7 2, 4 3 0 December 31 $ 3,480,703 2,752,068

34


34

( D ) Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net

December 31, 2015 December 31, 2014 N eg o t ia b l e c er t if ic a t es o f depo s it $ 225 , 5 8 7 , 8 4 5 27 7 , 6 0 0 , 0 0 0 T r ea s u r y b il l s 3 4 3 , 4 4 6 3 8 0 , 9 0 7 G o v er nm ent b o nds 1 1 1 , 5 7 7 , 8 5 2 1 7 8 , 8 7 3 , 8 9 1 C o r po r a t e b o nds 3 0 , 0 1 9 , 7 27 4 2, 6 0 4 , 7 4 4 F ina nc ia l deb ent u r es 3 1 , 9 3 5 , 0 4 5 1 5 , 5 4 8 , 0 5 9 B enef ic ia r y c er t if ic a t es 7 , 5 8 0 , 7 3 9 7 , 4 7 5 , 9 5 0 L is t ed a nd O T C s ec u r it ies 4 , 9 3 4 , 24 7 3 , 0 0 2, 9 0 7 As s et - b a c k ed s ec u r it ies 4 3 , 3 8 3 , 4 9 4 24 , 6 7 7 , 1 5 8 O t h er s ec u r it ies a nd b o nds 3 25 , 4 4 6 3 1 2, 1 9 2 V a l u a t io n a dj u s t m ent o f f ina nc ia l a s s et s 20 , 4 5 9 3 22, 3 7 2 T o t a l $ 455,708,300 550,798,180

P l ea s e r ef er t o N o t es 6 ( T ) a nd 8 f o r inf o r m a t io n w it h r eg a r d t o t h e r epu r c h a s e c o ndit io ns f o r , o r r es t r ic t io ns o n, a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s s h o w n a b o v e. P l ea s e r ef er t o N o t e 9 ( A) f o r det a il s o f t h e t r u s t c o nt r a c t w it h r eg a r d t o M eg a F ina nc ia l H o l ding C o m pa ny ’ s s h a r es h el d b y t h e B a nk .

( E ) D er iv a t iv e f ina nc ia l ins t r u m ent s －h edg ing

H edg ing der iv a t iv e f ina nc ia l a s s et s o f t h e B a nk w er e a s f o l l o w s : December 31, 2015 December 31, 2014 F a ir v a l u e h edg e: I nt er es t r a t e s w a ps $ 9 1 , 8 4 5 20 5 , 6 1 4 H edg e o f a net inv es t m ent in a f o r eig n o per a t io n: C u r r enc y s w a ps 1 5 , 6 8 1 1 , 29 3 , 8 7 2 T o t a l $ 107,526 1,499,486

H edg ing der iv a t iv e f ina nc ia l l ia b il it ies o f t h e B a nk w er e a s b el o w : December 31, 2015 December 31, 2014 F a ir v a l u e h edg e: I nt er es t r a t e s w a ps $ - 21 , 7 1 6 N o n del iv er y f o r w a r ds 26 , 4 28 3 5 , 0 9 3 H edg e o f a net inv es t m ent in a f o r eig n o per a t io n: C u r r enc y s w a ps 4 1 5 , 0 0 0 8 5 9 , 5 1 3 T o t a l $ 441,428 916,322

35


35

( a ) F a ir v a l u e h edg e I n o r der t o m inim iz e t h e r is k f r o m f u t u r e m a r k et int er es t r a t e f l u c t u a t io n, t h e B a nk ent er ed int o int er es t r a t e s w a p t r a ns a c t io ns , w h er e t h e int er es t r a t e pa y a b l e o n f ixed- int er es t - r a t e deb t s is s u ed h a s b een s w a pped w it h a f l o a t ing int er es t r a t e t o r edu c e int er es t r a t e r is k . T h e B a nk f u r t h er ent er ed int o no n- del iv er y f o r w a r ds ; t h es e c o nt r a c t s a r e pr inc ipa l l y t o h edg e a g a ins t t h e f o r eig n exc h a ng e f l u c t u a t io n o f c a pit a l o f t h e int er na t io na l b a nk ing depa r t m ent .

Des ignated hedging ins tru ments Financial

ins tru ments

Fair v al u e

H edged items des ignated as

hedging ins tru ments December 31,2015

December 31, 2014 P er pet u a l s u b o r dina t ed deb ent u r es in U S D I nt er es t r a t e s w a ps $ - 1 5 1 , 9 3 4 F ina nc ia l deb ent u r es in N T D 9 1 , 8 4 5 3 1 , 9 6 4 C a pit a l o f int er na t io na l b a nk ing depa r t m ent

in U S D N o n del iv er y

f o r w a r ds ( 26 , 4 28 ) ( 3 5 , 0 9 3 )

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , net g a ins ( l o s s es ) o n t h e h edg ing der iv a t iv e f ina nc ia l ins t r u m ent s a nd t h e h edg ed it em s w er e a s f o l l o w s :


2015 2014 N et g a ins f r o m der iv a t iv e f ina nc ia l ins t r u m ent s $ 149,480 116,470 N et l o s s es f r o m t h e h edg ed it em s $ (314,746) (517,319)

( b ) H edg e o f a net inv es t m ent in a f o r eig n o per a t io n I n o r der t o m inim iz e t h e r is k f r o m o v er s ea s eq u it y - m et h o d inv es t m ent s , t h e B a nk ent er ed int o c u r r enc y s w a ps t o h edg e a g a ins t f o r eig n exc h a ng e f l u c t u a t io n.

Des ignated hedging ins tru ments

Financial

ins tru ments

Fair v al u e

H edged items des ignated as

hedging ins tru ments

December 31,2015

December 31, 2014 C T B C B a nk C o . , L t d. - H o C h i M inh C it y

B r a nc h C u r r enc y s w a ps $ ( 1 0 , 7 1 7 ) ( 21 , 21 9 )

C T B C C a pit a l C o r p. ( 1 1 2, 3 8 9 ) ( 1 9 3 , 9 3 5 ) C T B C B a nk C o r p. ( C a na da ) 7 , 5 0 7 ( 4 , 0 4 7 ) T h e T o k y o S t a r B a nk , L t d. ( 28 3 , 7 20 ) 6 5 3 , 5 6 0

( F ) S ec u r it ies pu r c h a s ed u nder r ev er s e r epu r c h a s e a g r eem ent s

December 31, 2015 December 31, 2014 S ec u r it ies pu r c h a s ed u nder r ev er s e r epu r c h a s e a g r eem ent s $ - 2,774,393 F a c e v a l u e o f s ec u r it ies $ - 2,812,590

36


36

( G ) R ec eiv a b l es －net

December 31, 2015 December 31, 2014 N o t es r ec eiv a b l e $ 4 0 , 7 4 3 1 4 1 , 27 4 Ac c o u nt s r ec eiv a b l e 6 2, 3 27 , 7 1 2 6 2, 9 1 5 , 3 8 6 Ac c o u nt s r ec eiv a b l e f a c t o r ing 4 5 , 3 9 4 , 4 4 9 8 2, 7 7 6 , 222 I nt er es t r ec eiv a b l e 6 , 1 5 1 , 8 9 6 6 , 9 4 6 , 6 0 6 Ac c ept a nc es r ec eiv a b l e 5 , 7 9 3 , 3 0 7 7 , 1 5 2, 0 4 6 Ac c r u ed inc o m e 3 0 , 8 5 1 21 , 3 6 1 S ec u r it ies r ec eiv a b l e 5 , 7 9 1 , 1 6 5 8 , 0 9 2, 8 3 0 I nt er b a nk c l ea r ing r ec eiv a b l e 1 , 7 21 , 9 1 9 1 , 7 3 6 , 7 6 4 P r em iu m r ec eiv a b l e 5 , 5 3 1 , 0 9 0 3 , 9 7 9 , 6 8 7 Ac c o u nt s r ec eiv a b l e f o r a s s et s h el d f o r s a l e 1 3 , 6 1 0 , 4 3 0 - O t h er r ec eiv a b l es 2, 5 1 0 , 6 0 7 4 , 6 4 6 , 5 9 3 S u b t o t a l 1 4 8 , 9 0 4 , 1 6 9 1 7 8 , 4 0 8 , 7 6 9 L es s : Al l o w a nc e f o r c r edit l o s s es ( 2, 229 , 5 1 5 ) ( 2, 1 1 0 , 3 0 6 ) T o t a l $ 146,674,654 176,298,463 T h e a c c o u nt s r ec eiv a b l e s h o w n a b o v e inc l u ded t h e r ec eiv a b l es f r o m c r edit c a r d h o l der s w h o w er e inv o l v ed in deb t r epa y m ent neg o t ia t io n w it h t h e B a nk . P l ea s e r ef er t o N o t e 8 f o r inf o r m a t io n w it h r eg a r d t o t h e r es t r ic t io ns o n o t h er r ec eiv a b l es s h o w n a b o v e.

P l ea s e r ef er t o N o t e 6 ( J ) f o r c h a ng es in a l l o w a nc e f o r c r edit l o s s es o f r ec eiv a b l es l is t ed a b o v e. R ec eiv a b l es o f t h e B a nk a nd it s s u b s idia r ies s h o u l d b e inc l u ded in im pa ir m ent a s s es s m ent . P l ea s e r ef er t o t h e f o l l o w ing t a b l e f o r t h e a m o u nt o f r ec eiv a b l es a nd t h e r es pec t iv e a l l o w a nc e f o r c r edit l o s s es , exc l u ding t h a t o f c r edit c a r d r ec eiv a b l es , w h ic h is a c c o u nt ed f o r u nder pr o v is io ns . T o t a l r ec eiv a b l es do no t enc o m pa s s inv es t m ent s in s ec u r it y - r el a t ed a nd o t h er r ec eiv a b l es w h o s e im pa ir m ent a s s es s m ent s a r e c o ns is t ent w it h c o r r es po nding a s s et s . December 31, 2015 December 31, 2014

R ec eiv a b l es exc l u ded f r o m ev a l u a t io n o f im pa ir m ent $ 8,632,837 9,088,129

December 31, 2015

Items

Receiv abl es

Adj u s tment of dis cou nt and

p remiu m

Al l ow ance f or credit l os s es

W it h o b j ec t iv e ev idenc e o f im pa ir m ent

I ndiv idu a l a s s es s m ent $ 3 22, 7 6 9 - 3 0 5 , 7 7 3

C o l l ec t iv e a s s es s m ent 3 , 5 6 7 , 6 3 4 - 4 5 2, 23 6 W it h o u t o b j ec t iv e

ev idenc e o f im pa ir m ent C o l l ec t iv e a s s es s m ent 1 3 3 , 9 6 7 , 9 3 2 - 1 , 4 7 1 , 5 0 6

T o t a l $ 137,858,335 - 2,229,515

December 31, 2014

Items

Receiv abl es


p remiu m


W it h o b j ec t iv e ev idenc e o f im pa ir m ent

I ndiv idu a l a s s es s m ent $ 29 4 , 9 4 1 - 23 7 , 0 23

C o l l ec t iv e a s s es s m ent 3 , 9 3 0 , 7 23 - 5 0 8 , 0 1 2 W it h o u t o b j ec t iv e

ev idenc e o f im pa ir m ent C o l l ec t iv e a s s es s m ent 1 6 3 , 9 6 6 , 9 1 5 -

1 , 3 6 5 , 27 1

T o t a l $ 168,192,579 - 2,110,306

37


37

( H ) As s et s h el d f o r s a l e－net T h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t h e pl a nned s a l e o f 9 5 % f r a c t io na l o w ner s h ip o f it s h ea dq u a r t er b u il ding o n S ept em b er 25 , 20 1 3 . T h e B a nk is c o m m enc ing it s a u c t io n t o s el l t h is pr o per t y w h ic h is c l a s s if ied a s h el d f o r s a l e a c c o r ding l y .

December 31, 2015 December 31, 2014 R ea l es t a t e $ - 6,323,343

T h e B a nk s o l d 9 5 % f r a c t io na l o w ner s h ip o f t h e l a nd a s t h e f o r m er h ea dq u a r t er b u il ding l o c a t ed in X iny i dis t r ic t t o G r een H ea v en I nv es t m ent s L t d. a nd S h i- H e D ev el o pm ent C o r p. o n N o v em b er 6 , 20 1 5 . P l ea s e r ef er t o N o t e 1 3 ( A) f o r r el a t ed inf o r m a t io n o n dis po s a l o f l a nd. T h e B a nk r ec o g niz ed l o s s es o n dis po s a l o f t h e f o r m er h ea dq u a r t er b u il ding a m o u nt ed t o 2, 9 1 2, 9 9 0 a s l a nd o w ner s h ip t r a ns f er r ed.

( I ) L o a ns －net

December 31, 2015 December 31, 2014 C o r po r a t e l o a ns $ 5 27 , 0 9 0 , 1 6 8 4 7 8 , 24 3 , 7 22 M ic r o - b u s ines s l o a ns 22, 4 9 1 , 4 3 5 1 6 , 0 6 7 , 3 0 8 M o r t g a g e l o a ns 4 4 9 , 8 7 2, 1 9 4 3 6 3 , 7 5 4 , 3 8 1 Au t o m o b il e l o a ns 9 23 1 , 27 3 C o ns u m er l o a ns 1 0 5 , 9 9 2, 9 4 5 1 0 2, 1 6 9 , 0 5 1 S u b t o t a l o f N T D l o a ns 1 , 1 0 5 , 4 4 7 , 6 6 5 9 6 0 , 23 5 , 7 3 5 F o r eig n c u r r enc y l o a ns 9 1 9 , 5 9 6 , 5 26 8 7 2, 8 9 4 , 3 1 7 N o n- a c c r u a l l o a ns 1 4 , 9 1 1 , 3 1 5 1 5 , 6 1 8 , 7 9 1 S u b t o t a l 2, 0 3 9 , 9 5 5 , 5 0 6 1 , 8 4 8 , 7 4 8 , 8 4 3 L es s : Al l o w a nc e f o r c r edit l o s s es ( 27 , 0 26 , 7 26 ) ( 27 , 1 3 6 , 0 4 3 ) L es s : Adj u s t m ent o f dis c o u nt a nd pr em iu m ( 1 , 5 6 7 , 6 1 2) ( 1 , 5 9 4 , 6 3 0 ) F a ir v a l u e a dj u s t m ent r es u l t ing f r o m a c q u is it io n 1 1 3 , 1 4 1 1 7 7 , 9 8 4 T o t a l $ 2,011,474,309 1,820,196,154 T h e l o a ns s h o w n a b o v e inc l u ded t h e l o a ns t o c a s h c a r d h o l der s a nd f idu c ia r y l o a ns t o c l ient s w h o w er e inv o l v ed in deb t r epa y m ent neg o t ia t io n w it h t h e B a nk . P l ea s e r ef er t o N o t e 6 ( AO ) f o r t h e indu s t r y inf o r m a t io n. N o n- per f o r m ing l o a ns o f t h e B a nk a nd it s s u b s idia r ies w er e a s f o l l o w s : December 31, 2015 December 31, 2014 N o n- per f o r m ing l o a ns $ 16,011,226 17,659,396 F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , s u s pended int er es t o n no n- per f o r m ing l o a ns w er e a s f o l l o w s :

For the year ended December 31, 2015


S u s pended int er es t o n no n- per f o r m ing l o a ns $ 159,826 89,553

38


38

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h er e w er e no l o a ns w r it t en o f f w it h o u t pr io r r ec o u r s e. P l ea s e r ef er t o N o t e 6 ( J ) f o r c h a ng es in a l l o w a nc e f o r c r edit l o s s es o f l o a ns l is t ed a b o v e. L o a ns s h o u l d b e inc l u ded in t h e t o t a l a m o u nt s o f a s s es s m ent o f im pa ir m ent t o det er m ine t h e a l l o w a nc e f o r c r edit l o s s es , w h ic h w a s a s f o l l o w s :

December 31, 2015

Items

Loans


p remiu m


W it h o b j ec t iv e ev idenc e o f im pa ir m ent I ndiv idu a l a s s es s m ent $ 1 3 , 9 9 2, 0 8 3 3 1 , 6 4 5 4 , 7 1 0 , 3 5 5

C o l l ec t iv e a s s es s m ent 20 , 8 4 8 , 221 1 , 1 7 1 3 , 7 9 2, 3 4 6 W it h o u t o b j ec t iv e

ev idenc e o f im pa ir m ent C o l l ec t iv e a s s es s m ent 2, 0 0 5 , 1 1 5 , 20 2 ( 1 , 6 0 0 , 4 28 ) 1 8 , 5 24 , 0 25

T o t a l $ 2,039,955,506 (1,567,612) 27,026,726

December 31, 2014

Items

Loans


p remiu m


W it h o b j ec t iv e ev idenc e o f im pa ir m ent I ndiv idu a l a s s es s m ent $ 25 , 1 6 6 , 3 8 3 ( 4 9 , 3 8 1 ) 6 , 6 0 2, 0 6 8

C o l l ec t iv e a s s es s m ent 22, 7 9 6 , 3 8 8 3 , 4 9 6 4 , 1 5 8 , 7 9 6

W it h o u t o b j ec t iv e ev idenc e o f im pa ir m ent C o l l ec t iv e a s s es s m ent 1 , 8 0 0 , 7 8 6 , 0 7 2 ( 1 , 5 4 8 , 7 4 5 ) 1 6 , 3 7 5 , 1 7 9

T o t a l $ 1,848,748,843 (1,594,630) 27,136,043

( J ) Al l o w a nc e f o r c r edit l o s s es T h e c h a ng es in a l l o w a nc e f o r c r edit l o s s es , a t t r ib u t ed t o l o a ns , r ec eiv a b l es , o t h er f ina nc ia l a s s et s , a nd pr o v is io n o f g u a r a nt ee r es er v es , w er e a s f o l l o w s :


Receiv abl es Loans

Inherent ris k of ov eral l

cl aims

Def au l t ris k of

s p ecif ic cl aims

Total


cl aims

Def au l t ris k of

s p ecif ic cl aims

Total

Other (Note)

Total

B eg inning b a l a nc e $ 1 , 3 6 5 , 2 7 1 7 4 5 , 0 3 5 2, 1 1 0 , 3 0 6 1 6 , 3 7 5 , 1 7 9 1 0 , 7 6 0 , 8 6 4 27 , 1 3 6 , 0 4 3 3 26 , 7 6 9 29 , 5 7 3 , 1 1 8 C u r r ent pr o v is io n ( r ev er s a l ) 9 9 , 23 9 ( 1 25 , 8 9 9 ) ( 26 , 6 6 0 ) 1 , 9 4 2, 9 7 1 ( 8 22, 7 29 ) 1 , 1 20 , 24 2 1 4 8 , 4 3 5 1 , 24 2, 0 1 7

C u r r ent w r it e- o f f - ( 8 28 , 9 7 4 ) ( 8 28 , 9 7 4 ) ( 8 , 3 5 3 ) ( 3 , 3 7 6 , 0 9 6 ) ( 3 , 3 8 4 , 4 4 9 ) ( 1 1 8 , 1 8 4 ) ( 4 , 3 3 1 , 6 0 7 ) R ec o v er y o f b a d deb t s - 9 6 6 , 3 7 5 9 6 6 , 3 7 5 - 1 , 8 0 6 , 4 6 2 1 , 8 0 6 , 4 6 2 1 0 , 3 5 2 2, 7 8 3 , 1 8 9 N o n- a c c r u a l l o a ns

t r a ns f er r ed f r o m no n- l o a n

f ina nc ia l a s s et s

- 1 , 8 7 0 1 , 8 7 0 - - - ( 1 , 8 7 0 ) -

E xc h a ng e r a t e ef f ec t s 6 , 9 9 6 ( 3 9 8 ) 6 , 5 9 8 21 4 , 228 1 3 4 , 20 0 3 4 8 , 4 28 4 8 , 5 0 8 4 0 3 , 5 3 4

E nding b a l a nc e $ 1,471,506 758,009 2,229,515 18,524,025 8,502,701 27,026,726 414,010 29,670,251

39


39


Receiv abl es Loans


cl aims

Def au l t ris k of

s p ecif ic cl aims

Total


cl aims

Def au l t ris k of

s p ecif ic cl aims

Total Other (Note)

Total

B eg inning b a l a nc e $ 1 , 24 8 , 8 20 1 , 27 4 , 9 5 8 2, 5 23 , 7 7 8 1 0 , 6 4 0 , 8 3 2 6 , 4 6 0 , 5 6 3 1 7 , 1 0 1 , 3 9 5 4 20 , 5 0 9 20 , 0 4 5 , 6 8 2 T r a ns f er r ed f r o m t h e

m er g er

3 , 4 5 0 1 , 1 6 0 4 , 6 1 0 2, 9 3 9 , 4 5 3 6 , 3 7 6 , 5 6 6 9 , 3 1 6 , 0 1 9 1 9 , 5 4 8 9 , 3 4 0 , 1 7 7

C u r r ent pr o v is io n ( r ev er s a l ) 9 2, 7 8 5 ( 3 3 3 , 7 4 7 ) ( 24 0 , 9 6 2) 2, 8 5 8 , 23 6 4 22, 9 6 0 3 , 28 1 , 1 9 6 1 0 , 9 1 0 3 , 0 5 1 , 1 4 4 C u r r ent w r it e- o f f - ( 1 , 29 2, 5 7 6 ) ( 1 , 29 2, 5 7 6 ) - ( 3 , 6 3 3 , 6 5 7 ) ( 3 , 6 3 3 , 6 5 7 ) ( 1 1 8 , 9 20 ) ( 5 , 0 4 5 , 1 5 3 ) R ec o v er y o f b a d deb t s - 1 , 0 7 3 , 4 3 9 1 , 0 7 3 , 4 3 9 - 1 , 7 4 9 , 20 1 1 , 7 4 9 , 20 1 225 2, 8 22, 8 6 5

N o n- a c c r u a l l o a ns t r a ns f er r ed f r o m o n- l o a n

f ina nc ia l a s s et s

- 1 9 , 4 4 2 1 9 , 4 4 2 - - - ( 1 9 , 4 4 2) -

E xc h a ng e r a t e ef f ec t s 20 , 21 6 2, 3 5 9 22, 5 7 5 ( 6 3 , 3 4 2) ( 6 1 4 , 7 6 9 ) ( 6 7 8 , 1 1 1 ) 1 3 , 9 3 9 ( 6 4 1 , 5 9 7 )

E nding b a l a nc e $ 1,365,271 745,035 2,110,306 16,375,179 10,760,864 27,136,043 326,769 29,573,118

N o t e: I nc l u ding o t h er f ina nc ia l a s s et s a nd pr o v is io n o f g u a r a nt ee r es er v es , et c .

( K ) H el d- t o - m a t u r it y f ina nc ia l a s s et s －net

December 31, 2015 December 31, 2014 C o m m er c ia l pa per $ 5 7 7 , 8 6 0 - N eg o t ia b l e c er t if ic a t es o f depo s it 5 6 , 5 5 1 , 9 5 1 27 , 0 0 2, 0 28 T r ea s u r y b il l s 3 , 25 8 , 9 5 6 4 , 8 5 3 , 4 6 2 G o v er nm ent b o nds 7 4 , 3 0 5 , 20 3 28 , 7 1 5 , 3 8 1 C o r po r a t e b o nds 4 , 7 3 5 , 9 6 8 3 , 3 7 2, 8 1 3 F ina nc ia l deb ent u r es 8 , 1 0 3 , 3 21 7 , 1 3 2, 7 7 8 As s et - b a c k ed s ec u r it ies 1 3 3 , 8 4 7 7 7 , 8 6 5 T o t a l $ 147,667,106 71,154,327

P l ea s e r ef er t o N o t es 6 ( T ) a nd 8 f o r inf o r m a t io n w it h r eg a r d t o t h e r epu r c h a s e c o ndit io ns f o r , o r r es t r ic t io ns o n, h el d- t o - m a t u r it y f ina nc ia l a s s et s s h o w n a b o v e.

( L ) F ina nc ia l a s s et s s ec u r it iz a t io n

D u r ing t h e t h ir d q u a r t er o f 20 0 4 , t h e B a nk s ec u r it iz ed it s m o r t g a g e l o a ns w it h a b o o k v a l u e o f $ 5 , 0 3 1 , 1 9 2 w it h D eu t s c h e B a nk AG , T a ipei B r a nc h ( D eu t s c h e B a nk ) , a s T r u s t ee, a nd o f f er ed s ec u r it y in t h e f o r m o f b enef ic ia r y c er t if ic a t es . T h es e b enef ic ia r y c er t if ic a t es h a v e a r edem pt io n per io d f r o m Au g u s t 1 0 , 20 0 4 t o Au g u s t 25 , 20 24 . T h e o t h er t er m s o f t h es e b enef ic ia r y c er t if ic a t es a r e a s f o l l o w s :

Cl as s of benef iciary certif icates is s u ed

Order of p rincip al

rep ayment Is s u e amou nt/

Face v al u e Interes t Rate P ayment

f req u ency C l a s s A 1 s t 4 , 3 25 , 0 0 0 t h e index r a t e + 0 . 25 % o nc e a m o nt h C l a s s B 2nd 25 0 , 0 0 0 t h e index r a t e + 0 . 5 5 % o nc e a m o nt h C l a s s C 3 r d 1 5 0 , 0 0 0 t h e index r a t e + 0 . 8 0 % o nc e a m o nt h C l a s s D 4 t h 1 3 0 , 0 0 0 t h e index r a t e + 1 . 25 % o nc e a m o nt h C l a s s E 5 t h 1 7 6 , 1 9 2 N o ne o nc e a m o nt h

T h e B a nk h o l ds t h e C l a s s E b enef ic ia r y c er t if ic a t es a nd r et a ins t h e r ig h t t o int er es t in exc es s o f t h e a m o u nt pa id t o t h e h o l der s o f c l a s s A, B , C a nd D b enef ic ia r y c er t if ic a t es . I f t h e m o r t g a g e l o a n deb t o r s def a u l t , neit h er t h e inv es t o r no r t h e T r u s t ee h a s t h e r ig h t o f r ec o u r s e t o t h e B a nk . T h e r epa y m ent o f t h e pr inc ipa l o f C l a s s E b enef ic ia r y c er t if ic a t es is s u b o r dina t e

40


4 0

t o t h e inv es t o r s ’ c er t if ic a t es , a nd t h eir v a l u e is a f f ec t ed b y t h e c r edit r is k , pr epa y m ent , a nd int er es t r is k o f t h e s ec u r it iz ed l o a ns . T h e B a nk h a d a l r ea dy a c c o m pl is h ed t h e r eq u ir em ent s o f r epu r c h a s ing t h e m o r t g a g e l o a n w h ic h w a s c o l l a t er a l iz ed b y t h e t r u s t . O n S ept em b er 25 , 20 1 4 , t h e B a nk exc er c is ed t h e r ig h t t o pu r c h a s e t h e r em a ining m o r t g a g e l o a n s ec u r it iz a t io n a nd r ec eiv ed t h e t er m ina t ed a l l o c a t io n o f t r u s t . D u e t o t h e a b o v e t r a ns a c t io n, t h e B a nk r ec o g niz ed r ev er s a l o f im pa ir em ent l o s s o n c l a s s E b enef ic ia r y c er t if ic a t es a m o u nt ing t o $ 8 , 3 5 5 , a nd r ec o g niz ed g a ins o n dis po s ed o f a s s et s a m o u nt ing t o $ 6 6 , 6 8 4 , T h e a f o r em ent io ned a m o u nt s a r e r ec o g niz ed a s g a in o n r ev er s a l o f im pa ir m ent l o s s a nd r ea l iz ed g a in o n h el d- t o - m a t u r it y f ina nc ia l a s s et s , r es pec t iv el y , in t h e y ea r 20 1 4 .

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 t h e c a s h f l o w s r ec eiv ed f r o m a nd pa id t o s ec u r it iz a t io n t r u s t s w er e a s f o l l o w s :

For the year ended

December 31 2014 S er v ic ing f ees r ec eiv ed $ 6 6 8 O t h er c a s h f l o w s r ec eiv ed o n r et a ined int er es t s 1 7 6 , 4 25 R ec o v er y o f c a s h r es er v e 1 1 , 9 26 S er v ic ing a dv a nc es ( 1 , 4 1 1 ) R ec o v er y o f s er v ic ing a dv a nc es 1 , 7 6 3

( M ) I nv es t m ent u nder eq u it y m et h o d－net

December 31, 2015 % Book v al u e

G r a nd B il l s F ina nc e C o r po r a t io n ( o r ig ina l inv es t m ent a t $ 1 , 0 1 0 , 8 8 0 t h o u s a nd)

21 . 1 5 $ 1 , 8 6 3 , 1 8 7

AZ - S t a r C o . , L t d. ( o r ig ina l inv es t m ent a t J P Y 1 2, 0 0 0 t h o u s a nd)

4 0 . 0 0 3 , 29 6

AZ - S t a r no . 1 I nv es t m ent L im it ed P a r t ner s h ip ( o r ig ina l inv es t m ent a t J P Y 1 , 3 9 7 , 1 0 3 t h o u s a nd)

4 3 . 9 8 3 5 3 , 9 4 2

T o t a l $ 2,220,425

December 31, 2014 % Book v al u e

G r a nd B il l s F ina nc e C o r po r a t io n ( o r ig ina l inv es t m ent a t $ 1 , 0 1 0 , 8 8 0 t h o u s a nd)

21 . 1 5 $ 1 , 7 6 8 , 0 3 6

G C B F ina nc e ( H K ) L im it ed ( o r ig ina l inv es t m ent a t $ 223 , 0 5 0 t h o u s a nd) ( N o t e)

1 0 0 . 0 0 24 2, 9 3 0

T o t a l $ 2,010,966

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e a m o u nt o f pr o f it a nd l o s s f r o m a s s o c ia t es r ec o g niz ed u nder eq u it y - m et h o d inv es t m ent s w a s a s b el o w :

For the year ended December 31 2015 2014 G r a nd B il l s F ina nc e C o r po r a t io n $ 1 24 , 9 7 6 9 7 , 20 1 G C B F ina nc e ( H K ) L im it ed ( N o t e) ( 3 5 , 8 1 0 ) ( 1 1 4 , 3 9 3 ) T o t a l $ 89,166 (17,192) N o t e T h e ent it y h a s b een l iq u ida t ed du r ing 20 1 5 .

41


4 1

T h e f o l l o w ing is t h e c o l l ec t ed pr o r a t ed f ina nc ia l inf o r m a t io n o f t h e a s s o c ia t es t h a t a r e indiv idu a l l y ins ig nif ic a nt t o t h e B a nk a nd it s s u b s idia r ies .



N et I nc o m e f r o m C o nt inu ing O per a t io ns $ 1 24 , 9 7 6 9 7 , 20 1 O t h er c o m pr eh ens iv e inc o m e 3 8 , 8 1 5 1 9 , 4 4 1 C o m pr eh ens iv e I nc o m e $ 163,791 116,642

( N ) O t h er f ina nc ia l a s s et s －net

December 31, 2015 December 31, 2014 S h o r t - t er m a dv a nc es $ 4 5 7 , 7 5 0 4 5 2, 0 22 L es s : a l l o w a nc e f o r c r edit l o s s es －s h o r t - t er m

a dv a nc es ( 1 4 , 7 5 2) ( 1 5 , 25 4 )

D epo s it s pl edg ed 4 1 2, 3 6 9 4 1 1 , 1 0 6 I nv es t m ent in deb t ins t r u m ent s w it h o u t

a c t iv e m a r k et s — net 1 4 , 1 9 8 , 7 5 2 1 7 , 6 0 0 , 4 0 9

F ina nc ia l a s s et s c a r r ied a t c o s t — net 2, 4 28 , 4 0 0 2, 0 7 6 , 8 5 6 N o n- a c c r u a l l o a ns t r a ns f er r ed f r o m no n- l o a n

f ina nc ia l a s s et s 9 4 , 4 9 4 1 0 5 , 5 8 0

L es s : Al l o w a nc e f o r c r edit l o s s es — no n- a c c r u a l l o a ns t r a ns f er r ed f r o m no n- l o a n f ina nc ia l a s s et s

( 7 9 , 4 3 0 ) ( 8 6 , 5 1 0 )

O t h er s 1 4 5 , 7 26 1 8 1 , 3 6 6 T o t a l $ 17,643,309 20,725,575

F ina nc ia l a s s et s c a r r ied a t c o s t a r e s t o c k inv es t m ent s o f t h e B a nk a nd it s s u b s idia r ies . S inc e no a c t iv e q u o t ed m a r k et is a v a il a b l e, no r t h e f a ir v a l u e is r el ia b l y m ea s u r ea b l e, a c q u is it io n c o s t is t h er ef o r e a do pt ed a s t h e b a s el ine f o r t h e v a l u a t io n o f s u c h a s s et s . P l ea s e r ef er t o N o t e 6 ( J ) f o r inf o r m a t io n w it h r eg a r d t o t h e c h a ng es o f s h o r t - t er m a dv a nc es a nd a l l o w a nc e f o r c r edit l o s s es o f no n- a c c r u a l l o a ns t r a ns f er r ed f r o m no n- l o a n f ina nc ia l a s s et s s h o w n a b o v e. P l ea s e r ef er t o N o t e 8 f o r inf o r m a t io n w it h r eg a r d t o t h e r es t r ic t io ns o n t h e o t h er f ina nc ia l a s s et s s h o w n a b o v e.

( O ) P r em is es a nd eq u ipm ent －net

December 31, 2015

Cos t

Accu mu l ated dep reciation

Accu mu l ated imp airment

Net

L a nd $ 1 5 , 5 3 9 , 8 0 4 - 1 23 , 1 6 8 1 5 , 4 1 6 , 6 3 6 B u il ding s 29 , 0 3 6 , 5 9 1 4 , 7 3 5 , 3 6 3 6 8 , 1 5 8 24 , 23 3 , 0 7 0 T r a ns po r t a t io n eq u ipm ent 7 2, 23 2 3 0 , 9 7 2 - 4 1 , 26 0 M is c el l a neo u s eq u ipm ent 6 , 6 7 6 , 4 4 4 2, 9 8 8 , 1 6 6 - 3 , 6 8 8 , 27 8 C o ns t r u c t io n in pr o g r es s 25 7 , 28 0 - - 25 7 , 28 0 P r epa y m ent f o r eq u ipm ent 3 2, 7 1 7 - - 3 2, 7 1 7 P r epa y m ent f o r l a nd a nd b u il ding s 5 , 1 8 6 , 29 7 - - 5 , 1 8 6 , 29 7 L ea s ed pr em is es 1 , 1 5 1 , 6 21 26 3 , 3 4 6 - 8 8 8 , 27 5 T o t a l $ 57,952,986 8,017,847 191,326 49,743,813

42


4 2

December 31, 2014

Cos t Accu mu l ated

dep reciation Accu mu l ated

imp airment

Net L a nd $ 1 4 , 6 4 0 , 3 8 6 - 1 3 0 , 20 3 1 4 , 5 1 0 , 1 8 3

B u il ding s 20 , 3 3 9 , 4 6 1 4 , 1 4 9 , 5 8 0 7 2, 4 3 6 1 6 , 1 1 7 , 4 4 5 T r a ns po r t a t io n eq u ipm ent 6 0 , 4 5 4 27 , 7 6 4 - 3 2, 6 9 0 M is c el l a neo u s eq u ipm ent 5 , 5 5 3 , 5 27 2, 9 7 1 , 25 3 - 2, 5 8 2, 27 4 C o ns t r u c t io n in pr o g r es s 6 , 9 9 3 , 0 6 4 - - 6 , 9 9 3 , 0 6 4 P r epa y m ent f o r eq u ipm ent 3 9 3 , 9 4 5 - - 3 9 3 , 9 4 5 P r epa y m ent f o r l a nd a nd b u il ding s 2, 0 3 0 , 1 8 2 - - 2, 0 3 0 , 1 8 2 L ea s ed pr em is es 3 1 4 , 5 7 2 1 4 5 , 6 1 8 - 1 6 8 , 9 5 4 T o t a l $ 50,325,591 7,294,215 202,639 42,828,737

C h a ng es in t h e c o s t a r e a s b el o w :

J anu ary 1, 2015

Cu rrent increas e

Cu rrent decreas e

Others (ex change dif f erence)

December 31, 2015

L a nd $ 1 4 , 6 4 0 , 3 8 6 1 , 1 9 3 , 23 7 3 1 6 , 4 0 8 22, 5 8 9 1 5 , 5 3 9 , 8 0 4 B u il ding s 20 , 3 3 9 , 4 6 1 9 , 1 6 0 , 9 5 6 6 1 3 , 5 21 1 4 9 , 6 9 5 29 , 0 3 6 , 5 9 1 T r a ns po r t a t i o n eq u ipm ent 6 0 , 4 5 4 23 , 5 0 3 1 1 , 5 6 9 ( 1 5 6 ) 7 2, 23 2 M is c el l a neo u s eq u ipm ent 5 , 5 5 3 , 5 27 2, 0 0 7 , 9 8 5 9 20 , 4 22 3 5 , 3 5 4 6 , 6 7 6 , 4 4 4 C o ns t r u c t i o n in pr o g r es s 6 , 9 9 3 , 0 6 4 2, 5 0 3 , 8 4 9 9 , 24 2, 1 1 5 2, 4 8 2 25 7 , 28 0 P r epa y m ent f o r eq u ipm ent 3 9 3 , 9 4 5 5 6 1 , 21 2 9 22, 4 4 0 - 3 2, 7 1 7 P r epa y m ent f o r l a nd a nd

b u il ding s 2, 0 3 0 , 1 8 2 4 , 3 4 9 , 3 5 2 1 , 1 9 3 , 23 7 - 5 , 1 8 6 , 29 7

L ea s ed pr em is es 3 1 4 , 5 7 2 8 27 , 8 5 5 22, 3 7 0 3 1 , 5 6 4 1 , 1 5 1 , 6 21 T o t a l $ 50,325,591 20,627,949 13,242,082 241,528 57,952,986

J anu ary 1,

2014 Cu rrent

increas e(Note)

Cu rrent decreas e Others (ex change

dif f erence) December 31,

2014 L a nd $ 1 4 , 1 4 0 , 3 8 5 5 6 1 , 6 0 4 9 , 20 1 ( 5 2, 4 0 2) 1 4 , 6 4 0 , 3 8 6

B u il ding s 1 0 , 5 7 6 , 5 1 7 1 0 , 4 3 4 , 8 1 2 6 4 1 , 3 7 2 ( 3 0 , 4 9 6 ) 20 , 3 3 9 , 4 6 1 T r a ns po r t a t i o n eq u ipm ent 5 7 , 8 3 0 1 7 , 1 5 8 1 7 , 28 2 2, 7 4 8 6 0 , 4 5 4 M is c el l a neo u s eq u ipm ent 4 , 1 0 6 , 0 3 7 3 , 1 0 6 , 1 9 9 1 , 5 6 1 , 9 3 7 ( 9 6 , 7 7 2) 5 , 5 5 3 , 5 27 C o ns t r u c t i o n in pr o g r es s 1 0 , 0 3 2, 5 9 8 5 , 8 1 8 , 8 0 1 8 , 8 5 0 , 9 3 2 ( 7 , 4 0 3 ) 6 , 9 9 3 , 0 6 4 P r epa y m ent f o r eq u ipm ent 220 , 0 6 9 8 9 3 , 5 1 0 7 1 9 , 6 3 4 - 3 9 3 , 9 4 5 P r epa y m ent f o r l a nd a nd

b u il ding s 1 , 0 25 , 229 1 , 0 0 4 , 9 5 3 - - 2, 0 3 0 , 1 8 2

L ea s ed pr em is es 28 9 , 1 7 7 6 2, 5 0 4 3 3 , 8 8 4 ( 3 , 225 ) 3 1 4 , 5 7 2 T o t a l $ 40,447,842 21,899,541 11,834,242 (187,550) 50,325,591

N o t e F o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , t h e inc r ea s e o f $ 3 , 6 25 , 29 4 w a s du e t o t h e

a c q u is it io n o f T h e T o k y o S t a r B a nk , L t d.

C h a ng es in a c c u m u l a t ed depr ec ia t io n a r e a s b el o w :

J anu ary 1, 2015

Cu rrent increas e

Cu rrent decreas e

Others (ex changedif f erence)

December 31, 2015

B u il ding s $ 4 , 1 4 9 , 5 8 0 8 9 8 , 25 5 3 5 9 , 8 7 8 4 7 , 4 0 6 4 , 7 3 5 , 3 6 3 T r a ns po r t a t i o n eq u ipm ent 27 , 7 6 4 1 3 , 0 24 9 , 1 8 1 ( 6 3 5 ) 3 0 , 9 7 2 M is c el l a neo u s eq u ipm ent 2, 9 7 1 , 25 3 8 7 9 , 9 3 9 8 8 4 , 9 7 6 21 , 9 5 0 2, 9 8 8 , 1 6 6 L ea s ed pr em is es 1 4 5 , 6 1 8 1 3 6 , 9 3 6 22, 3 7 0 3 , 1 6 2 26 3 , 3 4 6 T o t a l $ 7,294,215 1,928,154 1,276,405 71,883 8,017,847

J anu ary 1,

2014 Cu rrent

increas e(Note)



2014 B u il ding s $ 3 , 4 8 8 , 0 8 2 1 , 23 2, 7 7 9 5 1 3 , 6 6 7 ( 5 7 , 6 1 4 ) 4 , 1 4 9 , 5 8 0 T r a ns po r t a t i o n eq u ipm ent 28 , 9 20 1 1 , 8 5 6 1 4 , 29 6 1 , 28 4 27 , 7 6 4 M is c el l a neo u s eq u ipm ent 2, 4 1 8 , 25 7 1 , 7 9 3 , 8 22 1 , 1 6 1 , 5 9 7 ( 7 9 , 229 ) 2, 9 7 1 , 25 3 L ea s ed pr em is es 1 0 8 , 1 8 6 7 2, 1 25 3 3 , 6 26 ( 1 , 0 6 7 ) 1 4 5 , 6 1 8 T o t a l $ 6,043,445 3,110,582 1,723,186 (136,626) 7,294,215

43


4 3

N o t e F o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , t h e inc r ea s e o f $ 1 , 7 7 0 , 21 9 w a s du e t o t h e a c q u is it io n o f T h e T o k y o S t a r B a nk , L t d.

C h a ng es in a c c u m u l a t ed im pa ir m ent a r e a s b el o w :

J anu ary 1, 2015

Cu rrent increas e

Cu rrent decreas e


December 31, 2015

L a nd $ 1 3 0 , 2 0 3 - 7 , 0 3 5 - 1 23 , 1 6 8 B u il ding s 7 2, 4 3 6 - 4 , 27 8 - 6 8 , 1 5 8 T o t a l $ 202 ,639 - 11,313 - 191,326

J anu ary 1,

2014

Cu rrent increas e



2014 L a nd $ 1 0 9 , 9 4 9 20 , 25 4 - - 1 3 0 , 20 3

B u il ding s 6 2, 0 1 5 1 0 , 4 21 - - 7 2, 4 3 6 T o t a l $ 171 ,964 30,675 - - 202,639

O n S ept em b er 4 , 20 1 2, t h e B a nk s ig ned w it h C o nt inent a l D ev el o pm ent C o r po r a t io n a c o nt r a c t o f s a l e o f b u il ding s a nd l a nd. F iv e y ea r s f r o m S ept em b er 4 , 20 1 2, t h e B a nk w il l o b t a in t h e r ig h t s o f l a nd, c u r r ent l y o w ned b y C o nt inent a l D ev el o pm ent C o r po r a t io n, a l o ng w it h t h e 1 s t t o 8 t h f l o o r s a nd pa r k ing s pa c es o f t h e new b u il ding l o c a t ed t h er e. T h e z o ning c o de o f t h e l a nd is N o . 9 9 & 1 0 0 , H u ik u o S ec t io n, X it u n D is t r ic t , T a ic h u ng C it y . T h e $ 2, 1 8 1 , 0 0 0 c o nt r a c t pr ic e w a s neg o t ia t ed b a s ed o n t h e a ppr a is a l r epo r t pr epa r ed b y D T Z R ea l E s t a t e Appr a is a l F ir m a nd S a v il l s R ea l E s t a t e Appr a is a l F ir m . T h e c o nt r a c t pr ic e w il l b e pa id in ins t a l l m ent s pr o po r t io na t e w it h c o ns t r u c t io n pr o g r es s du r ing t h e c o nt r a c t per io d, a c c o u nt ed f o r u nder pr em is es a nd eq u ipm ent －net , pr epa y m ent f o r l a nd a nd b u il ding s . O n J u l y 23 , 20 1 5 , t h e B a nk s ig ned a c o nt r a c t o f pu r c h a s e o f b u il ding s a nd l a nd, w h ic h l o c a t ed in N eih u D is t r ic t , T a ipei C it y , a c c o u nt ed f o r u nder pr em is es a nd eq u ipm ent －net , pr epa y m ent f o r l a nd a nd b u il ding s . P l ea s e r ef er t o N o t e 1 3 ( A) f o r r el a t ed inf o r m a t io n.

O n J u l y 29 , 20 1 5 , t h e B a nk s ig ned a c o nt r a c t o f s a l e o f r ea l es t a t e, w h ic h l o c a t ed in S o ng g a o R o a d, T a ipei C it y , a c c o u nt ed f o r u nder pr em is es a nd eq u ipm ent －net , b u il ding s . T h e o w ner s h ip t r a ns f er o f r ea l es t a t e h a s b een c o m pl et ed o n S ept em b er 23 , 20 1 5 . P l ea s e r ef er t o N o t e 1 3 ( A) f o r r el a t ed inf o r m a t io n.

( P ) I nt a ng ib l e a s s et s －net

December 31, 2015 December 31, 2014 G o o dw il l $ 1 0 , 3 8 5 , 8 9 1 1 0 , 3 8 5 , 8 9 1 C o m pu t er s o f t w a r e 4 , 4 0 0 , 6 9 7 4 , 21 1 , 7 7 8 O t h er s 2, 0 6 3 3 , 0 9 4 T o t a l $ 14,788,651 14,600,763 G o o dw il l o f t h e B a nk a nd it s s u b s idia r ies w a s a c q u ir ed f r o m b u s ines s c o m b ina t io n.

44


4 4

C h a ng es in int a ng ib l e a s s et s w er e a s f o l l o w s :

J anu ary 1, 2015

Cu rrent increas e

Cu rrent decreas e


December 31, 2015

G o o dw il l $ 1 0 , 3 8 5 , 8 9 1 - - - 1 0 , 3 8 5 , 8 9 1 C o m pu t er s o f t w a r e 4 , 21 1 , 7 7 8 1 , 4 6 2, 8 7 2 1 , 3 22, 221 4 8 , 26 8 4 , 4 0 0 , 6 9 7 O t h er s 3 , 0 9 4 - 1 , 0 3 1 - 2, 0 6 3 T o t a l $ 14,600,763 1,462,872 1,323,252 48,268 14,788,651

J anu ary 1, 2014

Cu rrent increas e(Note)

Cu rrent decreas e


December 31, 2014

G o o dw il l $ 1 0 , 3 8 5 , 8 9 1 - - - 1 0 , 3 8 5 , 8 9 1 C o m pu t er s o f t w a r e 1 , 8 0 8 , 3 1 2 3 , 4 3 6 , 9 9 6 8 1 8 , 4 6 4 ( 21 5 , 0 6 6 ) 4 , 21 1 , 7 7 8 O t h er s 4 , 1 26 - 1 , 0 3 2 - 3 , 0 9 4 T o t a l $ 12,198,329 3,436,996 819,496 (215,066) 14,600,763

N o t e F o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , t h e inc r ea s e o f $ 1 , 6 1 7 , 1 8 9 w a s du e t o t h e

a c q u is it io n o f T h e T o k y o S t a r B a nk , L t d.

( Q ) O t h er a s s et s －net

December 31, 2015 December 31, 2014 P r epa y m ent s $ 3 , 8 5 1 , 1 7 9 4 , 4 0 1 , 7 9 7 F o r ec l o s ed pr o per t ies r ec eiv ed－net 1 1 7 , 3 6 2 1 0 9 , 5 6 6

T em po r a r y pa y m ent s 7 8 , 5 7 1 1 7 6 , 24 4 R ef u nda b l e depo s it s －net 3 0 , 220 , 3 7 0 1 6 , 8 5 6 , 4 5 7 L o ng - t er m pr epa id r ent 2, 7 1 9 , 3 4 6 2, 7 8 6 , 6 29 C a s h s u r r ender v a l u e o f l if e ins u r a nc e 1 , 8 1 0 , 9 1 5 1 , 7 1 4 , 6 6 9 O t h er s 8 5 0 , 1 5 0 5 0 5 , 9 3 9 T o t a l $ 39,647,893 26,551,301 I n M a y 20 0 6 , t h e B a nk a c q u ir ed t h e s u per f ic ies o f l o t s 4 3 , 4 3 - 1 , 4 5 a nd 4 5 - 1 o f J ing m a o S ec t io n, N a nk a ng , T a ipei, f r o m T a iw a n F er t il iz er C o . , L t d. f o r 5 0 y ea r s t h r o u g h a pu b l ic t ender . T h e a c q u is it io n c o s t a m o u nt ed t o $ 3 , 3 6 4 , 1 4 0 ( inc l u ding b u s ines s t a x a nd o t h er r el a t ed expens es o f t h e s u per f ic ies ) . T h e r ent a l is det er m ined a nnu a l l y a t t h e r a t e o f 8 % o f t h e g o v er nm ent - a s s es s ed pr es ent v a l u e. P l ea s e r ef er t o N o t e 8 f o r inf o r m a t io n o n per f o r m a nc e g u a r a nt ee depo s it s .

I n o r der t o f u l f il l t h e B a nk ’ s s o c ia l r es po ns ib il it y , im pr o v e t h e im a g e o f t h e B a nk a nd r ec eiv e a l o ng t er m b enef it f r o m a dv er t is em ent s , t h e B a nk s po ns o r ed a pr o f es s io na l b a s eb a l l t ea m b y s ig ning a s po ns o r s h ip a nd c o o per a t iv e a dv er t is em ent c o nt r a c t w it h H u a Y i E nt er t a ining C o . L t d. o n D ec em b er 5 , 20 1 3 , a m o u nt ing t o $ 4 0 0 , 0 0 0 a nd a c c o u nt ed u nder pr epa id expens es . T h e du r a t io n o f t h e na m e o f t h e b a s eb a l l t ea m w il l l a s t f o r 1 0 y ea r s , s t a r t ing f r o m t h e da t e t h e B a nk a ppo int ed t h e t ea m na m e.

( R ) D epo s it s f r o m C ent r a l B a nk a nd o t h er b a nk s December 31, 2015 December 31, 2014 D epo s it s f r o m C ent r a l B a nk $ 3 3 1 , 25 2 1 4 1 , 8 6 8 D epo s it s f r o m o t h er b a nk s 1 4 , 3 5 1 , 4 3 2 4 , 3 9 9 , 7 21 D epo s it s f r o m po s t o f f ic es 2, 0 9 1 , 5 20 3 , 1 8 3 , 6 5 5 O v er dr a f t a g a ins t o t h er b a nk s 1 , 1 5 0 , 25 1 3 , 0 25 , 23 6 D u e t o o t h er b a nk s 27 , 7 0 9 , 8 1 9 3 9 , 1 8 3 , 9 4 8 T o t a l $ 45,634,274 49,934,428

45


4 5

( S ) D u e t o C ent r a l B a nk a nd o t h er b a nk s

December 31, 2015 December 31, 2014 F ina nc ing f r o m C ent r a l B a nk $ 1 4 , 0 4 0 , 6 6 2 4 7 , 6 7 0 , 0 3 3 F ina nc ing f r o m o t h er b a nk s 5 , 6 9 4 , 3 6 7 6 , 4 1 7 , 1 1 0 T o t a l $ 19,735,029 54,087,143

F ina nc ing f r o m C ent r a l B a nk : ( a ) T h e B a nk

December 31, 2015 December 31, 2014 B o r r o w ing s ( U S D ) $ 5 1 , 6 1 3 6 4 , 5 1 6 I nt er es t r a t e 0 . 5 2% ~ 6 M L I B O R 0 . 3 3 % ~ 6 M L I B O R M a t u r it y da t e J u l y 26 , 20 1 9 J u l y 26 , 20 1 9 I nt er es t pa y m ent

s em i- a nnu a l l y a nd a t t h e m a t u r it y da t e.

s em i- a nnu a l l y a nd a t t h e m a t u r it y da t e.

( b ) T h e T o k y o S t a r B a nk , L t d.

December 31, 2015 December 31, 2014 B o r r o w ing s ( J P Y ) $ 4 4 , 9 0 0 , 0 0 0 1 7 2, 1 0 0 , 0 0 0 I nt er es t r a t e 0 . 1 0 % 0 . 1 0 % M a t u r it y da t e D ec em b er 5 , 20 1 6 J u ne 6 , 20 1 6 I nt er es t pa y m ent a t t h e m a t u r it y da t e. a t t h e m a t u r it y da t e.

F ina nc ing f r o m o t h er b a nk s : ( a ) C T B C B a nk C o r p. ( U S A)

December 31, 2015 December 31, 2014 I nt er b a nk b o r r o w ing s ( U S D ) $ 8 5 , 0 0 0 8 5 , 0 0 0 I nt er es t r a t e 0 . 9 1 % ~ 2. 9 6 % 0 . 9 1 % 2. 9 6 % M a t u r it y da t e D ec em b er 3 1 , 20 20 D ec em b er 3 1 , 20 20

( b ) P T . B a nk C T B C I ndo nes ia

December 31, 2015 December 31, 2014 I nt er b a nk b o r r o w ing s ( I D R ) $ 1 , 20 2, 4 6 7 , 23 6 9 0 8 , 6 3 7 , 6 3 8 I nt er es t r a t e 0 . 8 3 % ~ 9 . 8 3 % 0 . 7 0 % ~ 1 . 8 3 % M a t u r it y da t e N o v em b er 2, 20 1 8 S ept em b er 23 , 20 1 6

( c ) T h e T o k y o S t a r B a nk , L t d.

December 31, 2015 December 31, 2014 I nt er b a nk b o r r o w ing s ( J P Y ) $ - 5 , 27 2, 6 6 9 I nt er es t r a t e - 1 . 4 8 % M a t u r it y da t e - D ec em b er , 20 3 2

46


4 6

( T ) S ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s December 31, 2015

As s ets

P ar v al u e Sel l ing p rice

(Note) Des ignated

rep u rchas e amou nt Des ignated

rep u rchas e date F ina nc ia l a s s et s m ea s u r ed a t f a ir

v a l u e t h r o u g h pr o f it o r l o s s $ 6 , 3 1 5 , 0 0 0 6 , 3 1 0 , 29 5 6 , 3 1 0 , 5 0 8 B ef o r e J a nu a r y 22,

20 1 6 Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s

－net 3 9 , 7 3 4 , 4 8 2 4 0 , 222, 0 7 5 4 0 , 23 3 , 26 3 B ef o r e F eb r u a r y 5 ,

20 1 6 H el d- t o - m a t u r it y f ina nc ia l a s s et s

－net 4 , 0 4 2, 25 0 4 , 1 1 5 , 7 1 3 4 , 1 1 8 , 8 9 0 B ef o r e J u ne 21 ,

20 1 6 T o t a l $ 50,091,732 50,648,083 50,662,661

December 31, 2014

As s ets

P ar v al u e Sel l ing p rice

(Note) Des ignated

rep u rchas e amou nt Des ignated

rep u rchas e date F ina nc ia l a s s et s m ea s u r ed a t f a ir

v a l u e t h r o u g h pr o f it o r l o s s $ 4 , 9 5 5 , 0 0 0 4 , 9 4 9 , 25 3 4 , 9 5 0 , 4 7 1 B ef o r e M a r c h 6 ,

20 1 5 Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s

－net 4 7 , 220 , 9 9 2 4 8 , 1 8 8 , 4 0 4 4 8 , 21 2, 5 5 6 B ef o r e Apr il 20 ,

20 1 5 H el d- t o - m a t u r it y f ina nc ia l a s s et s

－net 7 , 0 21 , 5 6 0 7 , 0 9 3 , 1 1 9 7 , 0 9 7 , 8 7 5 B ef o r e J u ne 23 ,

20 1 5 T o t a l $ 59,197,552 60,230,776 60,260,902 N o t e: R ec o g niz ed u nder s ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent .

( U ) P a y a b l es

December 31, 2015 December 31, 2014 Ac c o u nt s pa y a b l e $ 5 , 8 3 3 , 4 4 4 5 , 0 0 1 , 9 3 8 Ac c o u nt s pa y a b l e f a c t o r ing 4 , 27 5 , 9 0 1 5 , 8 7 3 , 9 7 8 Ac c r u ed expens es 1 6 , 0 6 5 , 1 6 1 1 6 , 4 8 8 , 6 9 3 I nt er es t pa y a b l e 7 , 3 6 1 , 8 0 1 1 2, 3 8 5 , 5 5 0 Ac c ept a nc es pa y a b l e 5 , 7 4 9 , 9 9 0 7 , 0 8 1 , 0 4 3 C o l l ec t io n pa y a b l e 3 , 8 8 5 , 5 4 5 3 , 5 6 4 , 6 7 6 O t h er t a x pa y a b l e 6 0 0 , 9 0 6 7 3 4 , 5 9 9 D iv idends a nd b o nu s es pa y a b l e 1 5 0 , 9 3 7 1 3 1 , 9 7 4 C h ec k s f o r c l ea r a nc e 2, 1 6 7 , 9 3 7 3 , 4 6 7 , 222 I nt er b a nk c l ea r ing pa y a b l e 6 0 9 , 5 5 5 4 9 4 , 9 8 0 M is c el l a neo u s l o t t er y a c c o u nt s pa y a b l e 8 , 0 8 7 , 7 7 2 9 , 29 4 , 3 4 7 C o ns t r u c t io n r et a ina g e r ec eiv ed 6 0 3 , 24 1 1 , 0 4 2, 3 9 5 O nl ine a c c o u nt s pa y a b l e 3 1 4 , 3 7 0 2, 1 4 7 , 5 7 7 S ec u r it ies pa y a b l e 1 , 7 4 8 , 9 4 8 6 , 3 7 9 , 0 8 3 O t h er pa y a b l es 2, 6 4 7 , 9 6 9 2, 8 6 8 , 8 20 T o t a l $ 60,103,477 76,956,875

47


4 7

( V ) D epo s it s a nd r em it t a nc es December 31, 2015 December 31, 2014

N T D depo s it s C h ec k ing a c c o u nt s $ 8 , 9 7 1 , 8 7 2 8 , 5 4 8 , 5 5 2 D em a nd depo s it s D em a nd depo s it s 1 7 6 , 9 7 5 , 3 5 1 1 3 9 , 9 6 3 , 0 9 1 D em a nd s a v ing s depo s it s 5 9 0 , 6 4 9 , 4 9 2 5 29 , 4 5 0 , 6 9 2 P u b l ic t r ea s u r y depo s it s 1 2, 0 0 4 , 0 26 7 , 0 1 5 , 29 2 S u b t o t a l o f dem a nd depo s it s 7 7 9 , 6 28 , 8 6 9 6 7 6 , 4 29 , 0 7 5 T im e depo s it s T im e depo s it s 1 8 4 , 8 22, 6 4 7 1 8 2, 1 9 9 , 4 3 5 T im e s a v ing s depo s it s 4 1 1 , 29 7 , 9 23 3 5 7 , 3 4 9 , 4 0 3 N eg o t ia b l e c er t if ic a t es o f depo s it 1 , 8 3 8 , 4 0 0 1 , 3 7 0 , 20 0 P u b l ic t r ea s u r y depo s it s 1 0 , 20 5 , 3 6 2 1 0 , 3 7 0 , 0 0 0 O t h er s 20 , 3 4 8 , 0 0 0 1 2, 3 23 , 0 0 0 S u b t o t a l o f t im e depo s it s 6 28 , 5 1 2, 3 3 2 5 6 3 , 6 1 2, 0 3 8 S u b t o t a l o f N T D depo s it s 1 , 4 1 7 , 1 1 3 , 0 7 3 1 , 24 8 , 5 8 9 , 6 6 5 F o r eig n c u r r enc y depo s it s 1 , 3 1 6 , 5 21 , 1 1 6 1 , 1 7 1 , 9 4 6 , 4 21 S t o r ed v a l u e c a r ds 1 6 7 1 6 7 R em it t a nc es u nder c u s t o dy 9 7 , 228 21 6 , 4 9 4 R em it t a nc es o u t s t a nding 6 5 2, 0 27 1 , 1 4 6 , 223 T o t a l $ 2,734,383,611 2,421,898,970

( W ) F ina nc ia l deb ent u r es

Bonds December 31,

2015 December 31,

2014 5 . 6 25 % S t ep- u p C a l l a b l e P er pet u a l S u b o r dina t ed N o t es $ - 1 5 , 8 5 9 , 9 9 8 20 0 5 - 5 - 1 2, 0 0 0 , 0 0 0 20 0 6 - 1 3 , 1 0 0 , 0 0 0 3 , 1 0 0 , 0 0 0 20 0 8 - 1 2, 0 0 0 , 0 0 0 2, 0 0 0 , 0 0 0 20 0 8 - 2 - 7 0 0 , 0 0 0 20 0 8 - 3 - 3 , 0 5 0 , 0 0 0 20 1 1 - 1 1 2, 9 0 0 , 0 0 0 1 2, 9 0 0 , 0 0 0 20 1 3 - 1 5 , 0 3 1 , 0 0 0 5 , 1 0 3 , 0 0 0 20 1 4 - 1 ( s u b o r dina t ed f ina nc ia l deb ent u r es ) 20 , 0 0 0 , 0 0 0 20 , 0 0 0 , 0 0 0 20 1 4 - 2 ( s u b o r dina t ed f ina nc ia l deb ent u r es ) 1 5 , 0 0 0 , 0 0 0 1 5 , 0 0 0 , 0 0 0 20 1 4 - 1 ( f ina nc ia l deb ent u r es ) ( N o t e 3 ) 9 , 5 8 9 , 1 4 0 9 , 1 9 8 , 220 20 1 4 - 2 ( f ina nc ia l deb ent u r es ) ( N o t e 3 ) 24 , 5 6 8 , 0 3 8 23 , 5 6 6 , 4 7 4 20 1 5 - 1 ( N o t e 3 ) 8 , 4 9 7 , 9 6 2 - 20 1 5 - 2 1 2, 0 0 0 , 0 0 0 - 20 1 5 - 3 5 , 0 0 0 , 0 0 0 - 20 1 5 - 4 ( N o t e 3 ) 1 , 9 8 3 , 9 6 0 - N o . 4 C a l l a b l e U ns ec u r ed B o nd - 26 5 , 1 0 0 N o . 6 C a l l a b l e U ns ec u r ed B o nd - 29 1 , 6 1 0 N o . 7 C a l l a b l e U ns ec u r ed B o nd - 26 5 , 1 0 0 N o . 1 0 C a l l a b l e U ns ec u r ed B o nd 1 , 7 0 3 , 1 4 0 1 , 6 4 3 , 6 20 N o . 1 1 C a l l a b l e U ns ec u r ed B o nd 5 7 6 , 8 7 0 5 5 6 , 7 1 0 N o . 1 2 C a l l a b l e U ns ec u r ed B o nd - 1 , 8 29 , 1 9 0 N o . 1 3 C a l l a b l e U ns ec u r ed B o nd 1 , 6 4 8 , 20 0 1 , 5 9 0 , 6 0 0 N o . 1 4 C a l l a b l e U ns ec u r ed B o nd 5 4 9 , 4 0 0 5 3 0 , 20 0 N o . 1 5 C a l l a b l e U ns ec u r ed B o nd 27 4 , 7 0 0 26 5 , 1 0 0 N o . 1 6 C a l l a b l e U ns ec u r ed B o nd 3 0 2, 1 7 0 29 1 , 6 1 0 N o . 1 7 C a l l a b l e U ns ec u r ed B o nd 1 , 1 26 , 27 0 1 , 0 8 6 , 9 1 0 Adj u s t m ent f o r f a ir v a l u e inc r ea s e o f h edg ed t r a ns a c t i o ns 1 1 0 , 0 7 2 20 3 , 1 3 0 U na m o r t i z ed dis c o u nt ( 5 1 , 24 9 ) ( 7 4 , 5 8 0 ) L es s : f ina nc ia l l ia b il it y des ig na t ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s ( N o t e 3 ) ( 4 4 , 6 3 9 , 1 0 0 ) ( 3 2, 7 6 4 , 6 9 4 ) $ 81,270,573 98,457,298

48


4 8

Terms of trans actions Bond is s u ed Bonds Is s u e date Matu rity date Interes t rate Typ e

5 . 6 25 % S t ep- u p C a l l a b l e P er pet u a l S u b o r dina t ed N o t es

0 3 / 1 7 / 20 0 5 N / A 5 . 6 25 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y ; if r edem pt io n r i g h t is no t exer c is ed 1 0 y ea r s a f t e r t h e is s u e da t e, t h e int er es t r a t e w il l b e U S D 6 M L I B O R + 1 . 8 6 % .

P er pet u a l a c c u m u l a t ed s u b o r dina t ed f ina nc ia l deb ent u r es

20 0 5 - 5 1 1 / 29 / 20 0 5 N / A A= 3 . 3 5 % , B = 3 . 3 5 % ; i f r edem pt io n r i g h t is no t exer c i s ed 1 0 y ea r s a f t e r t h e is s u e da t e, t h e int er es t r a t e w il l b e 9 0 da y s C P + 1 . 8 5 % f o r A a nd 4 . 3 5 % f o r B .

P er pet u a l no n- a c c u m u l a t ed s u b o r dina t ed f ina nc ia l deb ent u r es

20 0 6 - 1 0 5 / 1 7 / 20 0 6 0 5 / 1 7 / 20 1 6 2. 1 4 % U ns ec u r ed f ina nc ia l deb ent u r e s 20 0 8 - 1 0 4 / 1 0 / 20 0 8 0 4 / 1 0 / 20 23 3 . 4 9 % U ns ec u r ed s u b o r dina t ed

f ina nc ia l deb ent u r e s 20 0 8 - 2 0 4 / 25 / 20 0 8 N / A 3 . 6 0 % ; i f r edem pt io n r i g h t i s no t exer c is ed 7 y ea r s

a f t er t h e is s u e da t e, t h e int er es t r a t e w il l b e 4 . 6 0 % P er pet u a l a c c u m u l a t ed

s u b o r dina t ed f ina nc ia l deb ent u r es

20 0 8 - 3 0 4 / 25 / 20 0 8 0 4 / 25 / 20 1 5 A= 3 . 1 0 % U ns ec u r ed s u b o r dina t ed f ina nc ia l deb ent u r e s

20 1 1 - 1 0 9 / 27 / 20 1 1 0 9 / 27 / 20 21 A= 1 . 8 0 % , B = 1 . 9 5 % . F r o m t h e 4 t h y ea r a f t e r t h e is s u e da t e, t h e int er es t r a t e w il l b e t h e pr im e r a t e pl u s 0 . 5 5 % ( N o t e 1 )

〃

20 1 3 - 1 0 3 / 1 2/ 20 1 3 0 3 / 1 2/ 20 1 6 2. 9 0 % U ns ec u r ed f ina nc ia l deb ent u r e s 20 1 4 - 1 ( s u b o r dina t ed f ina nc ia l

deb ent u r es )

0 6 / 1 8 / 20 1 4 N / A A= 3 . 7 0 % , B = 4 . 0 0 % . P er pet u a l no n- a c c u m u l a t ed s u b o r dina t ed f ina nc ia l deb ent u r es

20 1 4 - 2 ( s u b o r dina t ed f ina nc ia l deb ent u r es )

0 6 / 26 / 20 1 4 0 6 / 26 / 20 29 A= 2. 0 0 % , B = T h e pr im e r a t e pl u s 0 . 4 5 % . ( N o t e 2) U ns ec u r ed s u b o r dina t ed f ina nc ia l deb ent u r e s

20 1 4 - 1 ( f ina nc ia l deb ent u r es )

1 0 / 0 9 / 20 1 4 1 0 / 0 9 / 20 3 4 4 . 1 0 % ( N o t e 3 ) U ns ec u r ed f ina nc ia l deb ent u r e s

20 1 4 - 2 ( f ina nc ia l deb ent u r es )

1 1 / 26 / 20 1 4 1 1 / 26 / 20 4 4 0 % ( N o t e 3 )

20 1 5 - 1 0 1 / 27 / 20 1 5 0 1 / 27 / 20 4 5 0 % ( N o t e 3 ) 20 1 5 - 2 0 6 / 1 0 / 20 1 5 N / A 3 . 6 0 % P er pet u a l no n- a c c u m u l a t ed

s u b o r dina t ed f ina nc ia l deb ent u r es

20 1 5 - 3 0 6 / 1 8 / 20 1 5 0 6 / 1 8 / 20 25 A= 1 . 8 3 % , B = 2. 0 0 % , C = 2. 0 5 % U ns ec u r ed s u b o r dina t ed f ina nc ia l deb ent u r e s

20 1 5 - 4 0 7 / 20 / 20 1 5 0 7 / 20 / 20 4 5 0 % ( N o t e 3 ) U ns ec u r ed f ina nc ia l deb ent u r e s N o . 4 C a l l a b l e U ns ec u r ed

B o nd 0 1 / 1 3 / 20 1 0 0 1 / 1 4 / 20 20 3 . 4 9 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y U ns ec u r ed s u b o r dina t ed

f ina nc ia l deb ent u r e s N o . 6 C a l l a b l e U ns ec u r ed

B o nd 0 3 / 3 0 / 20 1 0 0 3 / 3 0 / 20 20 4 . 0 0 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y

N o . 7 C a l l a b l e U ns ec u r ed B o nd

0 6 / 29 / 20 1 0 0 6 / 29 / 20 20 3 . 8 9 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y

N o . 1 0 C a l l a b l e U ns ec u r ed B o nd

0 9 / 3 0 / 20 1 1 0 9 / 3 0 / 20 21 5 . 25 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y










1 2/ 1 4 / 20 1 2 1 2/ 1 4 / 20 22 3 . 5 0 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y


0 3 / 1 3 / 20 1 3 0 3 / 1 3 / 20 23 3 . 28 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y


0 6 / 0 6 / 20 1 3 0 6 / 0 6 / 20 23 3 . 4 6 % ; a n int er es t is pa y a b l e s em i - a nnu a l l y

N o t e1 : T h e o r ig ina l pr im e r a t e is b a s ed o n pa g e c o de 6 1 6 5 o f R eu t er s , t h e f ixed int er es t r a t e

o f 9 0 - da y C P / B A a t 1 1 : 0 0 a m o n t h e int er es t r es et da t e. W it h t h e c o ns ens u s r ea c h ed a m o ng c r edit o r s t h r o u g h f o r w a r d r a t e a g r eem ent , t h e pr im e r a t e w il l b e c h a ng ed t o t h e 3 - m o nt h T a ipei I nt er b a nk O f f er ed R a t e ( T AI B O R ) f r o m J a nu a r y 1 , 20 1 5 .

49


4 9

N o t e2: T h e pr im e r a t e is b a s ed o n pa g e c o de 6 1 6 5 o f R eu t er s , t h e f ixed int er es t r a t e o f 9 0 - da y C P / B A a t 1 1 : 0 0 a m o n t h e int er es t r es et da t e. I f no q u o t a t io n is a v a il a b l e o n pa g e c o de 6 1 6 5 o f R eu t er s , no pa g e is dis pl a y ed, o r no pr im e r a t e is r et r iev a b l e f r o m R eu t er s , t h e B a nk w o u l d c h a ng e t h e r es o u r c e o f t h e r a t e. T h e B a nk w o u l d s et t h e pr im e r a t e a s S ec o nda r y M a r k et F ixing R a t e o f 9 0 - da y T AI B I R 0 2 f r o m t h e “ T AI B I R S ec t io n” in t h e w eb pa g e o f T a iw a n D epo s it o r y a nd C l ea r ing C o r po r a t io n.

N o t e3 : F ina nc ia l deb ent u r es o f 20 1 4 - 1 20 1 4 - 2 20 1 5 - 1 a nd 20 1 5 - 4 a r e r ec o g niz ed a s

f ina nc ia l l ia b il it ies des ig na t ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s . F o r m o r e inf o r m a t io n, pl ea s e r ef er t o N o t e 6 ( C ) .

P l ea s e r ef er t o N o t e 6 ( E ) f o r t h e inf o r m a t io n o n t h e h edg ing o f b o nds s h o w n a b o v e.

( X ) O t h er f ina nc ia l l ia b il it ies December 31, 2015 December 31, 2014

L ea s e pa y a b l e $ 8 9 6 , 4 1 4 1 7 5 , 3 6 1 S t r u c t u r ed pr o du c t s 1 3 5 , 8 7 1 , 5 4 1 1 3 6 , 20 3 , 1 0 7 G u a r a nt ee depo s it s - s ec u r it ies l ending

t r a ns a c t io n 1 4 , 24 7 , 6 6 6 3 0 , 6 7 1 , 1 9 3

O t h er s 4 2, 8 8 9 4 7 , 9 8 3 T o t a l $ 151,058,510 167,097,644 O n D ec em b er 3 1 , 20 1 4 , t h e g u a r a nt ee depo s it s - s ec u r it ies l ending t r a ns a c t io n h a v e b een r ec l a s s if ied pr o per l y b y f o l l o w ing t h e s a m e pr es ent a t io n a s c u r r ent f ina nc ia l r epo r t .

( Y ) P r o v is io ns December 31, 2015 December 31, 2014 S et t l em ent c o m pens a t io n pr o v is io n $ 9 4 3 , 4 6 4 9 6 0 , 9 6 0

E m pl o y ee b enef it s pr o v is io n 4 , 6 5 9 , 6 29 4 , 1 5 0 , 6 8 0 G u a r a nt ee r es er v e 23 4 , 3 4 8 20 6 , 8 28

O t h er pr o v is io ns 1 9 5 , 9 8 4 1 8 3 , 25 5 T o t a l $ 6,033,425 5,501,723 S et t l em ent c o m pens a t io n pr o v is io n, w h ic h w a s t h e es t im a t ed a m o u nt in c o m pl ia nc e w it h I AS 3 7 , w a s a ppr o v ed b y t h e b o a r d o f dir ec t o r s t o b e a ppr o pr ia t ed f o r s et t l em ent c o m pens a t io n o f s t r u c t u r ed no t es , a nd t h e B a nk a c t iv el y neg o t ia t ed w it h t h e inv es t o r s .

( Z ) O t h er l ia b il it ies

December 31, 2015 December 31, 2014 Am o u nt r ec eiv ed in a dv a nc e $ 7 8 6 , 3 6 2 1 , 4 5 4 , 4 3 7

P a y a b l e in c u s t o dy 5 4 0 , 4 6 5 9 1 6 , 0 0 5 D ef er r ed inc o m e 5 4 6 , 24 3 6 1 3 , 24 4

G u a r a nt ee depo s it s r ec eiv ed 1 , 6 25 , 5 5 6 1 , 29 1 , 29 5 T em po r a r y r ec eipt 1 , 6 7 1 , 7 0 1 1 , 4 8 4 , 9 7 9 O t h er s 20 3 , 9 1 9 26 0 , 0 5 6 T o t a l $ 5,374,246 6,020,016 P l ea s e r ef er t o N o t e 6 ( X ) f o r inf o r m a t io n w it h r eg a r d t o r ec l a s s if ic a t io n o f g u a r a nt ee depo s it s o n D ec em b er 3 1 , 20 1 4 .

50


5 0

( AA) E m pl o y ee b enef it s ( a ) D ef ined c o nt r ib u t io n pl a n

T h e B a nk ’ s def ined c o nt r ib u t io n pl a n f o l l o w s t h e L a b o r P ens io n Ac t o f t h e R . O . C . a nd m a k es m o nt h l y c a s h c o nt r ib u t io ns t o t h e em pl o y ees ’ indiv idu a l pens io n a c c o u nt s a t t h e B u r ea u o f L a b o r I ns u r a nc e a t t h e r a t e o f 6 % o f t h e em pl o y ees ’ m o nt h l y s a l a r y . U nder t h is pl a n, t h e B a nk h a s no l eg a l o r c o ns t r u c t iv e o b l ig a t io n t o m a k e o t h er pa y m ent s a f t er t h e B a nk m a k es t h e f ixed a m o u nt o f c o nt r ib u t io n t o t h e B u r ea u o f L a b o r I ns u r a nc e.

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e pens io n expens e u nder def ined c o nt r ib u t io n pl a n o f t h e B a nk a nd it s s u b s idia r ies a m o u nt ed $ 6 0 1 , 6 1 9 a nd $ 4 9 3 , 25 2, r es pec t iv el y , a nd w er e c o nt r ib u t ed t o t h e B u r ea u o f L a b o r I ns u r a nc e o r l a b o r a g enc ies des ig na t ed b y l o c a l a u t h o r it ies in t h e c a s e o f o v er s ea s u nit s .

( b ) E m pl o y ee b enef it s pr o v is io n E m pl o y ee b enef it s pr o v is io n r ec o g niz ed b y t h e B a nk in t h e b a l a nc e s h eet w a s a s f o l l o w s : December 31, 2015 December 31, 2014 D ef ined b enef it s pl a n $ 4 , 1 3 1 , 27 1 3 , 6 6 5 , 6 5 6

R et ir ee depo s it s w it h f a v o r a b l e r a t es a nd o t h er po s t - em pl o y m ent b enef it s

23 7 , 4 4 2 224 , 8 9 5

T o t a l $ 4,368,713 3,890,551 ( 1 ) D ef ined b enef it s pl a n

T h e r ec o nc il ia t io n b et w een pr es ent v a l u e o f t h e B a nk ’ s def ined b enef it s o b l ig a t io n a nd f a ir v a l u e o f def ined b enef it s pl a n a s s et s w a s a s b el o w :

December 31, 2015 December 31, 2014 P r es ent v a l u e o f def ined b enef it s o b l ig a t io n $ 9 , 4 4 4 , 20 7 9 , 0 4 7 , 8 25 F a ir v a l u e o f pl a n a s s et s ( 5 , 3 1 2, 0 8 2) ( 5 , 3 8 4 , 4 5 4 ) N et def ined b enef it l ia b il it y $ 4,132,125 3,663,371

T h e B a nk ’ s def ined b enef it s pl a n c o nt r ib u t es t o des ig na t ed depo s it o r y a c c o u nt w it h B a nk o f T a iw a n. P a y m ent s o f pens io n b enef it s t o em pl o y ees w h o a r e c o v er ed b y t h e L a b o r S t a nda r ds Ac t a r e c a l c u l a t ed b a s ed o n t h e em pl o y ee’ s a v er a g e m o nt h l y s a l a r y f o r t h e l a s t 6 m o nt h s pr io r t o a ppr o v ed r et ir em ent a nd b a s e po int ( b . p. ) ent it l em ent b a s ed o n y ea r s o f s er v ic e.

A. C o m po s it io n o f pl a n a s s et s

T h e B a nk ’ s l a b o r pens io n f u nd c o nt r ib u t ed in c o m pl ia nc e w it h L a b o r S t a nda r d Ac t is m a na g ed b y B u r ea u o f L a b o r F u nds , M inis t r y o f L a b o r . Ac c o r ding t o R eg u l a t io ns f o r R ev enu es , E xpendit u r es S a f eg u a r d a nd U t il iz a t io n o f t h e L a b o r R et ir em ent F u nd, w it h r eg a r d t o t h e u t il iz a t io n o f t h e F u nd, it s m inim u m ea r ning s in t h e a nnu a l dis t r ib u t io ns o n t h e f ina l f ina nc ia l s t a t em ent s h a l l b e no l es s t h a n t h e ea r ning s a t t a ina b l e f r o m t h e a m o u nt s a c c r u ed f r o m t w o - y ea r t im e depo s it s w it h t h e int er es t r a t es o f f er ed b y l o c a l b a nk s . P l ea s e r ef er t o t h e w eb s it e o f B u r ea u o f L a b o r F u nds , M inis t r y o f L a b o r f o r inf o r m a t io n o n l a b o r pens io n f u nd a s s et s u t il iz a t io n inc l u ding ea r ning s r a t e a nd f u nd a s s et a l l o c a t io n.

51


5 1

B . M o v em ent s in pr es ent v a l u e o f t h e def ined b enef it s o b l ig a t io n

T h e m o v em ent s in pr es ent v a l u e o f def ined b enef it s o b l ig a t io n f o r t h e B a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :

For the year ended December 31 2015 2014 D ef ined b enef it s o b l ig a t io n a t J a nu a r y 1 $ 9 , 0 4 7 , 8 25 8 , 6 1 5 , 4 7 9C u r r ent s er v ic e c o s t s a nd int er es t 3 0 8 , 1 24 3 1 6 , 9 3 4R em ea s u r em ent s o f net def ined b enef it

l ia b il it y

Ac t u a r ia l g a ins a r is ing f r o m c h a ng es in f ina nc ia l a s s u m pt io ns

3 3 7 , 20 4 29 , 7 6 2

Ac t u a r ia l g a ins a r is ing f r o m exper ienc e a dj u s t m ent s

29 9 , 9 1 1 3 4 6 , 1 3 7

B enef it s pa id b y t h e pl a n ( 5 4 8 , 8 5 7 ) ( 26 0 , 4 8 7 )D ef ined b enef it s o b l ig a t io n a t D ec em b er 3 1 $ 9,444,207 9,047,825

C . M o v em ent s in f a ir v a l u e o f def ined b enef it pl a n a s s et s

T h e m o v em ent s in f a ir v a l u e o f t h e def ined b enef it pl a n a s s et s f o r t h e b a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :

For the year ended December 31 2015 2014 F a ir v a l u e o f pl a n a s s et s a t J a nu a r y 1 $ 5 , 3 8 4 , 4 5 4 5 , 1 24 , 25 8I nt er es t inc o m e 9 9 , 6 0 1 9 7 , 3 5 0R em ea s u r em ent s o f net def ined b enef it

l ia b il it y

R et u r n o n pl a n a s s et s ( exc l u de c u r r ent int er es t )

( 5 9 0 ) 28 , 4 4 2

C o nt r ib u t io n pl a ns m a de 3 7 7 , 4 7 4 3 9 4 , 8 9 1B enef it s pa id b y t h e pl a n ( 5 4 8 , 8 5 7 ) ( 26 0 , 4 8 7 )F a ir v a l u e o f pl a n a s s et s a t D ec em b er 3 1 $ 5,312,082 5,384,454

D . E xpens e r ec o g niz ed in pr o f it o r l o s s

T h e expens e r ec o g niz ed in pr o f it o r l o s s f o r t h e b a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :

For the year ended December 31 2015 2014 C u r r ent s er v ic e c o s t s $ 1 4 0 , 7 5 2 1 5 3 , 27 2N et int er es t o f net def ined b enef it l ia b il it y 6 7 , 7 7 1 6 6 , 3 1 2T o t a l $ 208,523 219,584

52


5 2

E . N et r em ea s u r em ent o f def ined b enef it l ia b il it y r ec o g niz ed in o t h er c o m pr eh ens iv e inc o m e

T h e net r em ea s u r em ent o f def ined b enef it l ia b il it y r ec o g niz ed in o t h er c o m pr eh ens iv e inc o m e f o r t h e b a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :

For the year ended December 31 2015 2014 C u m u l a t iv e a m o u nt a t J a nu a r y 1 $ ( 8 4 7 , 21 6 ) ( 4 9 7 , 4 7 2)R ec o g niz ed du r ing t h e per io d ( 6 3 4 , 5 6 4 ) ( 3 4 9 , 7 4 4 )C u m u l a t iv e a m o u nt a t D ec em b er 3 1 $ (1,481,780) (847,216)

F . P r im a r y a c t u a r ia l a s s u m pt io ns

T h e f o l l o w ing a r e t h e pr im a r y a c t u a r ia l a s s u m pt io ns a t t h e r epo r t ing da t e

December 31, 2015 December 31, 2014 D is c o u nt r a t e 1 . 25 % 1 . 8 5 % I nc r ea s ing r a t e o f f u t u r e c o m pens a t io n

l ev el s 3 . 0 0 % 3 . 0 0 %

T h e B a nk expec t ed $ 1 7 8 , 9 0 7 in c o nt r ib u t io ns t o b e pa id t o def ined b enef it pl a ns w it h in a y ea r a f t er r epo r t ing da t e o f 20 1 5 .

W eig h t ed a v er a g e du r a t io n b a s e o n def ined b enef it s pl a n w a s 7 y ea r s .

G . S ens it iv it y a na l y s is

W h en c o m pu t ing t h e pr es ent v a l u e o f def ined b enef it s o b l ig a t io n, t h e B a nk s h o u l d a s c er t a in a nd ev a l u a t e t h e a c t u a r ia l a s s u m pt io ns o n t h e b a l a nc e s h eet da t e, inc l u ding t h e dis c o u nt r a t e a nd f u t u r e c o m pens a t io n f l u c t u a t io n. Any c h a ng es in a c t u a r ia l a s s u m pt io ns c o u l d l ea d t o a s ig nif ic a nt ef f ec t o n t h e B a nk ’ s b a l a nc e o f def ined b enef it s o b l ig a t io n.

W h en a do pt ed pr im a r y a c t u a r ia l a s s u m pt io n c h a ng es , t h e ef f ec t s o f pr es ent v a l u e o f t h e b enef it o b l ig a t io n w er e a s f o l l o w s :

P res ent v al u e of the benef its

obl igation ef f ects Increas e 0.25% Decreas e 0.25% D ec em b er 3 1 , 20 1 5 D is c o u nt r a t e ( 1 4 3 , 21 5 ) 1 4 7 , 23 0

T h e s ens it iv it y a na l y s is a b o v e t h a t t o a na l y z ing t h e ef f ec t s o f c h a ng es in s ing l e a s s u m pt io ns is b a s e o n o t h er a s s u m pt io ns r em a ins u nc h a ng ed. Ac t u a l l y , c h a ng es in m a ny a s s u m pt io ns m a y l ink t o g et h er . S ens it iv it y a na l y s is a nd net pens io n l ia b il it y o f b a l a nc e s h eet w er e c a l c u l a t ed u nder t h e s a m e a ppr o a c h .

53


5 3

( 2) R et ir ee depo s it s w it h f a v o r a b l e r a t es a nd o t h er po s t - em pl o y m ent b enef it s T h e r ec o nc il ia t io n b et w een pr es ent v a l u e o f t h e B a nk ’ s def ined b enef it s o b l ig a t io n a nd f a ir v a l u e o f def ined b enef it s pl a n a s s et s w er e a s f o l l o w s :

December 31, 2015 December 31, 2014 P r es ent v a l u e o f t h e def ined b enef it s o b l ig a t io n $ 23 7 , 4 4 2 224 , 8 9 5F a ir v a l u e o f pl a n a s s et s - - N et def ined b enef it l ia b il it y $ 237,442 224,895 T h e B a nk ’ s o b l ig a t io n t o g r a nt r et ir ees , inc l u ding c u r r ent em pl o y ees r et ir ing in t h e f u t u r e, f ixed- a m o u nt depo s it s w it h f a v o r a b l e r a t es is b a s ed o n t h e B a nk ’ s R eg u l a t io ns f o r S u b s idiz ing t h e R et ir ee B enef it s . A. M o v em ent s in pr es ent v a l u e o f t h e def ined b enef it s o b l ig a t io n

T h e m o v em ent s in pr es ent v a l u e o f def ined b enef it s o b l ig a t io n f o r t h e B a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :

For the year ended December 31 2015 2014 D ef ined b enef it s o b l ig a t io n a t J a nu a r y 1 $ 224 , 8 9 5 21 1 , 3 1 5C u r r ent s er v ic e c o s t s a nd int er es t 7 , 21 6 6 , 5 4 9P a s t s er v ic e c o s t s 26 , 26 6 1 5 , 0 9 3R em ea s u r em ent s o f net def ined b enef it

l ia b il it y

Ac t u a r ia l ( l o s s es ) g a ins a r is ing f r o m c h a ng es in dem o g r a ph ic a s s u m pt io ns

( 9 , 7 4 0 ) 5 , 9 9 4

Ac t u a r ia l g a ins ( l o s s es ) a r is ing f r o m c h a ng es in f ina nc ia l a s s u m pt io ns

2, 9 26 ( 4 7 0 )

Ac t u a r ia l g a ins a r is ing f r o m exper ienc e a dj u s t m ent s

2, 9 6 6 1 , 1 0 3

B enef it s pa id b y t h e pl a n ( 1 7 , 0 8 7 ) ( 1 4 , 6 8 9 )D ef ined b enef it s o b l ig a t io n a t D ec em b er 3 1 $ 237,442 224,895

B . E xpens e r ec o g niz ed in pr o f it o r l o s s

T h e expens e r ec o g niz ed in pr o f it o r l o s s f o r t h e B a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :

For the year ended December 31 2015 2014 P a s t s er v ic e c o s t s $ 26 , 26 6 1 5 , 0 9 3N et int er es t o f net def ined b enef it l ia b il it y 7 , 21 6 6 , 5 4 9T o t a l $ 33,482 21,642

54


5 4

C . N et r em ea s u r em ent o f def ined b enef it l ia b il it y r ec o g niz ed in o t h er c o m pr eh ens iv e inc o m e

T h e net r em ea s u r em ent o f def ined b enef it l ia b il it y r ec o g niz ed in o t h er c o m pr eh ens iv e inc o m e f o r t h e b a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :

For the year ended December 31 2015 2014 C u m u l a t iv e a m o u nt a t J a nu a r y 1 $ ( 4 1 , 7 1 5 ) ( 3 5 , 0 8 8 )R ec o g niz ed du r ing t h e per io d 3 , 8 4 8 ( 6 , 6 27 )C u m u l a t iv e a m o u nt a t D ec em b er 3 1 $ (37,867) (41,715)

D . P r im a r y a c t u a r ia l a s s u m pt io n

December 31, 2015 December 31, 2014 Fav orabl e rates

f or emp l oyee dep os its

Other p os t- emp l oyment

benef its

Fav orabl e rates f or emp l oyee

dep os its

Other p os t- emp l oyment

benef its D is c o u nt r a t e 4 . 0 0 % 2. 0 0 % 4 . 0 0 % 2. 1 25 % E xpec t ed r a t e o f r et u r n o n depo s it ed

f u nd 2. 0 0 % 2. 0 0 % 2. 0 0 % 2. 1 25 %

Y ea r l y r a t e o f dec r ea s e o n a c c o u nt b a l a nc e/ u t il iz a t io n r a t e o n s u b s idy f o r h ea l t h exa m ina t io n a nd s o c ia l net w o r k ing

1 . 6 5 % 3 2% ~ 7 2% 1 . 1 5 % 3 2% ~ 7 0 %

P r o b a b il it y o f f u t u r e c h a ng es in f a v o r a b l e r a t es depo s it s s c h em e

5 0 . 0 0 % - % 5 0 . 0 0 % - %

E . S ens it iv it y a na l y s is

W h en c o m pu t ing t h e pr es ent v a l u e o f def ined b enef it s o b l ig a t io n, t h e B a nk s h o u l d a s c er t a in a nd ev a l u a t e t h e a c t u a r ia l a s s u m pt io ns o n t h e b a l a nc e s h eet da t e, inc l u ding t h e dis c o u nt r a t e a nd f u t u r e c o m pens a t io n f l u c t u a t io n. Any c h a ng es in a c t u a r ia l a s s u m pt io ns c o u l d l ea d t o a s ig nif ic a nt ef f ec t o n t h e B a nk ’ s b a l a nc e o f def ined b enef it s o b l ig a t io n. W h en a do pt ed pr im a r y a c t u a r ia l a s s u m pt io n c h a ng es , t h e ef f ec t s o f pr es ent v a l u e o f t h e b enef it s o b l ig a t io n w er e a s f o l l o w s :


obl igation ef f ects F a v o r a b l e r a t es f o r em pl o y ee depo s it s Increas e 0.25% Decreas e 0.25% D ec em b er 3 1 , 20 1 5 D is c o u nt r a t e ( 4 , 3 0 3 ) 4 , 5 0 8Y ea r l y r a t e o f dec r ea s e o n a c c o u nt b a l a nc e ( 4 , 5 5 6 ) 4 , 7 6 1


obl igation ef f ects O t h er po s t - em pl o y m ent b enef it s Increas e 0.25% Decreas e 0.25% D ec em b er 3 1 , 20 1 5 D is c o u nt r a t e ( 2, 7 6 3 ) 2, 9 3 0

T h e s ens it iv it y a na l y s is a b o v e t h a t t o a na l y z ing t h e ef f ec t s o f c h a ng es in s ing l e a s s u m pt io ns is b a s e o n o t h er a s s u m pt io ns r em a ins u nc h a ng ed. Ac t u a l l y , c h a ng es in m a ny a s s u m pt io ns m a y l ink t o g et h er . S ens it iv it y a na l y s is a nd net pens io n l ia b il it y o f b a l a nc e s h eet w er e c a l c u l a t ed u nder t h e s a m e a ppr o a c h .

55


5 5

( 3 ) D ef ined b enef it s pl a n o f o v er s ea s b r a nc h es a nd s u b s idia r ies

D ef ined b enef it s pl a n o f o v er s ea s b r a nc h es a nd s u b s idia r ies r ec o g niz ed in b a l a nc e s h eet s w er e a s f o l l o w s :

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , expens e r ec o g niz ed b y o v er s ea s b r a nc h es a nd s u b s idia r ies in pr o f it a nd l o s s a m o u nt ed t o $ 1 20 , 5 4 7 a nd $ 1 1 9 , 5 6 2, r es pec t iv el y .

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , a c t u a r ia l ( l o s s es ) g a ins r ec o g niz ed b y o v er s ea s s u b s idia r ies in o t h er c o m pr eh ens iv e inc o m e a m o u nt ed t o $ ( 1 , 7 8 1 ) a nd $ 4 4 , 9 9 2, r es pec t iv el y .

( AB ) I nc o m e t a x

( a ) I nc o m e t a x F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e inc o m e t a x ( expens es ) b enef it s a nd r el a t ed a c c o u nt s w er e a s f o l l o w s : For the year ended December 31 2015 2014 C u r r ent inc o m e t a x expens es $ ( 5 , 1 4 1 , 0 9 3 ) ( 6 , 0 0 4 , 0 8 4 ) D ef er r ed inc o m e t a x ( expens es ) b enef it s ( 4 0 3 , 7 7 9 ) 27 9 , 0 4 8 I nc o m e t a x expens es $ (5,544,872) (5,725,036) F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e inc o m e t a x ( expens es ) b enef it s r ec o g niz ed u nder o t h er c o m pr eh ens iv e inc o m e w er e a s f o l l o w s : For the year ended December 31 2015 2014 Items that w il l not be recl as s if ied s u bs eq u entl y to p rof it or

l os s

R em ea s u r em ent l o s s es r el a t ed t o def ined b enef it pl a ns $ 1 0 9 , 8 7 0 5 9 , 4 5 6 P r o po r t io na t e s h a r e o f o t h er c o m pr eh ens iv e l o s s es f r o m

a s s o c ia t es o r j o int v ent u r es u nder t h e eq u it y m et h o d 5 23 -

$ 110,393 59,456 Items that are or may be recl as s if ied s u bs eq u entl y to

p rof it or l os s

E xc h a ng e dif f er enc es o f o v er s ea s s u b s idia r ies ’ f ina nc ia l r epo r t s t r a ns l a t io n

$ ( 1 0 0 , 5 0 3 ) 1 25 , 3 5 4

U nr ea l iz ed v a l u a t io n l o s s es o n a v a il a b l e f o r s a l e f ina nc ia l a s s et s

27 4 , 8 1 1 1 4 2, 9 8 4

$ 174,308 268,338

December 31, 2015 December 31, 2014 D ef ined b enef it s pl a n $ 29 0 , 9 1 6 26 0 , 1 29

56


5 6

T h e r ec o nc il ia t io ns o f inc o m e t a x ( expens es ) b enef it s a nd net inc o m e b ef o r e t a x w er e a s f o l l o w s :



N et inc o m e $ 3 4 , 24 4 , 5 29 3 6 , 8 7 4 , 4 4 9 I nc o m e t a x expens es ( 5 , 5 4 4 , 8 7 2) ( 5 , 7 25 , 0 3 6 ) N et inc o m e b ef o r e inc o m e t a x 3 9 , 7 8 9 , 4 0 1 4 2, 5 9 9 , 4 8 5 S t r a ig h t inc o m e t a x ( 8 , 6 4 2, 225 ) ( 8 , 8 6 4 , 9 7 5 ) E f f ec t s o f f o r eig n a nd do m es t ic t a x r a t e s pr ea d ( 1 25 , 5 4 6 ) ( 5 1 , 4 1 7 ) T a x- exem pt inc o m e 3 , 25 7 , 3 9 3 3 , 9 4 5 , 9 5 7 Adj u s t m ent s o f pr io r y ea r ’ s inc o m e t a x ( 4 6 9 , 4 0 4 ) ( 1 , 1 1 6 , 0 3 4 ) 1 0 % s u r t a x o n u ndis t r ib u t ed ea r ning s ( 29 ) - I nc o m e b a s ic t a x ( 5 9 , 0 8 7 ) - O t h er s 4 9 4 , 0 26 3 6 1 , 4 3 3 I nc o m e t a x expens e $ (5,544,872) (5,725,036)

( b ) D ef er r ed t a x a s s et s a nd l ia b il it ies

R ec o g niz ed def er r ed t a x a s s et s a nd l ia b il it ies

T h e m o v em ent s o f def er r ed t a x a s s et s a nd l ia b il it ies f o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 w er e a s f o l l o w s :


Beginning Bal ance

Recogniz e in

p rof it and l os s

Recogniz e in other

comp rehens iv e income

Others

Ending Bal ance

P r o po r t i o n o f l o s s es ( g a ins ) r ec o g niz ed f r o m t h e inv es t m ent s in a s s o c ia t es a nd j o int v ent u r es u nder eq u it y m et h o d

$ 4 2 , 7 3 4 ( 8 3 , 4 4 1 ) - - ( 4 0 , 7 0 7 )

U nr ea l iz ed l o s s es ( g a ins ) o n f o r eig n exc h a ng e a nd der iv a t i v e f ina nc ia l ins t r u m ent s

1 9 4 , 9 6 8 ( 6 7 , 0 0 0 ) - ( 3 1 2) 1 27 , 6 5 6

Al l o w a nc e f o r c r edit l o s s es 3 , 225 , 20 1 ( 4 1 3 , 5 4 3 ) - 6 3 , 0 8 0 2, 8 7 4 , 7 3 8 U nr ea l iz ed v a l u a t i o n ( g a ins ) l o s s es o n

a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s ( 3 3 4 , 8 7 1 ) 5 8 9 27 4 , 8 1 1 1 8 , 7 1 3 ( 4 0 , 7 5 8 )

As s et s r et ir em ent l o s s es - 5 1 9 , 5 9 6 - - 5 1 9 , 5 9 6 I m pa ir m ent l o s s es o n a s s et s 21 , 3 3 1 ( 7 27 ) - 3 27 20 , 9 3 1 E m pl o y ee b enef it s l ia b il it y 6 0 3 , 6 9 7 ( 1 6 , 3 3 7 ) - ( 6 9 , 5 1 5 ) 5 1 7 , 8 4 5 S et t l em ent c o m pens a t io n pr o v i s io n 1 6 3 , 3 6 3 ( 2, 9 7 4 ) - - 1 6 0 , 3 8 9 E xc h a ng e dif f er enc es o f o v er s ea s

s u b s idia r ies ’ f ina nc ia l r epo r t s t r a ns l a t i o n

7 6 0 , 6 9 2 - ( 1 0 0 , 5 0 3 ) - 6 6 0 , 1 8 9

D ef ined b enef it pl a n a c t u a r ia l l o s s es ( g a ins )

1 4 9 , 9 9 2 - 1 0 9 , 8 7 0 ( 1 , 5 22) 25 8 , 3 4 0

L o s s c a r r y f o r w a r d a nd o t h er s 3 , 4 6 7 , 7 4 9 ( 3 3 9 , 9 4 2) - 1 7 4 , 1 3 0 3 , 3 0 1 , 9 3 7 Def erred tax as s ets (l iabil ities )- net $ 8,294,856 (403,779) 284,178 184,901 8,360,156

I nf o r m a t i o n dis c l o s ed in b a l a nc e s h eet D ef er r ed inc o m e t a x a s s et s $ 9 , 1 8 1 , 9 9 0 8 , 8 29 , 4 4 7 D ef er r ed t a x l ia b il it ies ( 8 8 7 , 1 3 4 ) ( 4 6 9 , 29 1 ) T o t a l $ 8,294,856 8,360,156

57


5 7


Beginning Bal ance

Recogniz e in

p rof it and l os s

Recogniz e in other

comp rehens iv e income

Others (Note)

Ending Bal ance

P r o po r t i o n o f l o s s es ( g a ins ) r ec o g niz ed f r o m t h e inv es t m ent s in a s s o c ia t es a nd j o int v ent u r es u nder eq u it y m et h o d

$ 1 1 3 , 5 6 3 ( 7 0 , 8 29 ) - - 4 2, 7 3 4

U nr ea l iz ed l o s s es ( g a ins ) o n f o r eig n exc h a ng e a nd der iv a t i v e f ina nc ia l ins t r u m ent s

( 1 , 1 4 3 ) 1 9 4 , 7 3 2 - 1 , 3 7 9 1 9 4 , 9 6 8

Al l o w a nc e f o r c r edit l o s s es 1 , 3 6 7 , 28 1 26 0 , 6 8 2 - 1 , 5 9 7 , 23 8 3 , 225 , 20 1 U nr ea l iz ed v a l u a t i o n ( g a ins ) l o s s es o n

a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s - ( 1 , 20 0 ) 1 4 2, 9 8 4 ( 4 7 6 , 6 5 5 ) ( 3 3 4 , 8 7 1 )

I m pa ir m ent l o s s es o n a s s et s 1 0 , 5 4 3 1 , 7 7 2 - 9 , 0 1 6 21 , 3 3 1 E m pl o y ee b enef it s l ia b il it y 5 5 9 , 5 1 6 ( 23 , 9 4 7 ) - 6 8 , 1 28 6 0 3 , 6 9 7 S et t l em ent c o m pens a t io n pr o v i s io n 1 7 4 , 6 7 1 ( 1 1 , 3 0 8 ) - - 1 6 3 , 3 6 3 E xc h a ng e dif f er enc es o f o v er s ea s

s u b s idia r ies ’ f ina nc ia l r epo r t s t r a ns l a t i o n

6 3 5 , 3 3 8 - 1 25 , 3 5 4 - 7 6 0 , 6 9 2

D ef ined b enef it pl a n a c t u a r ia l l o s s es 9 0 , 5 3 6 - 5 9 , 4 5 6 - 1 4 9 , 9 9 2 L o s s c a r r y f o r w a r d a nd o t h er s 2, 6 9 0 , 4 5 1 ( 7 0 , 8 5 4 ) - 8 4 8 , 1 5 2 3 , 4 6 7 , 7 4 9 Def erred tax as s ets (l iabil ities )- net $ 5,640,756 279,048 327,794 2,047,258 8,294,856

I nf o r m a t i o n dis c l o s ed in b a l a nc e s h eet D ef er r ed inc o m e t a x a s s et s $ 5 , 9 1 3 , 4 1 3 9 , 1 8 1 , 9 9 0 D ef er r ed t a x l ia b il it ies ( 27 2, 6 5 7 ) ( 8 8 7 , 1 3 4 ) T o t a l $ 5,640,756 8,294,856

N o t e: T h e t r a ns f er - in a m o u nt r es u l t ing f r o m t h e a c q u is it io n o f T h e T o k y o S t a r B a nk , L t d. w a s inc l u ded.

( c ) T h e B a nk ’ s inc o m e t a x r et u r ns exa m ina t io n, a ppl ic a t io n f o r r eexa m ina t io n, a nd a ppea l

a r e a s b el o w :

Lates t year of ex amination

C T B C B a nk C o . , L t d. 20 1 0 C h ina t r u s t B il l s F ina nc e C o r p.

( dis s o l v ed) 20 0 8

C T B C I ns u r a nc e B r o k er s C o . , L t d. ( dis s o l v ed)

20 1 0

Y ear Re- ex amination

C T B C B a nk C o . , L t d. 20 0 7 Am o r t iz a t io n o f g o o dw il l a nd int er es t inc o m e 〃 20 0 8 Am o r t iz a t io n o f g o o dw il l a nd t a x c r edit s pr es c r ib ed

in S t a t u t e f o r U pg r a ding I ndu s t r ies 〃 20 0 9 Am o r t iz a t io n o f g o o dw il l

C h ina t r u s t B il l s F ina nc e C o r p. ( dis s o l v ed)

20 0 7 I nt er es t inc o m e


20 0 7 ~ 20 0 8

〃 20 0 9 I nt er es t inc o m e a nd o per a t ing expens es a l l o c a t io n

Y ear Litigation C T B C B a nk C o . , L t d. 20 0 4 ~ 20 0 5 I nt er es t inc o m e 〃 20 0 6 I nt er es t inc o m e a nd o t h er expens es

C h ina t r u s t B il l s F ina nc e C o r p. ( dis s o l v ed)

20 0 5 ~ 20 0 6 I nt er es t inc o m e


20 0 5 ~ 20 0 6

58


5 8

( AC ) I m pu t a t io n c r edit a c c o u nt

December 31, 2015 December 31, 2014 ( a ) I m pu t a t io n c r edit a c c o u nt b a l a nc e $ 4,943 3,897

( b ) T a x dedu c t io n r a t io f o r ea r ning s dis t r ib u t io n t o r es ident in t h e R epu b l ic o f C h ina :


(f orecas t)


(actu al ) S t o c k div idends 0.14% 1.33%

Al l t h e ending b a l a nc e o f u ndis t r ib u t ed ea r ning s inc u r r ed a f t er 1 9 9 8 .

( c ) T h e a b o v e im pu t a t io n c a l c u l a t io n is in a c c o r da nc e w it h T a x R u l ing N o . 1 0 20 4 5 6 28 1 0

is s u ed b y t h e M inis t r y o f F ina nc e, R . O . C . o n O c t o b er 1 7 , 20 1 3 .

( AD ) C a pit a l s t o c k , c a pit a l s u r pl u s , a nd o t h er eq u it y int er es t ( a ) C a pit a l s t o c k

As o f D ec em b er 3 1 , 20 1 5 , t h e B a nk ’ s a u t h o r iz ed c a pit a l w a s $ 1 20 , 0 0 0 , 0 0 0 , r epr es ent ing 1 2, 0 0 0 , 0 0 0 t h o u s a nd c o m m o n s h a r es w it h pa r v a l u e a t N T D 1 0 per s h a r e, a nd pa id- in c a pit a l f o r c o m m o n s t o c k w a s $ 1 0 5 , 20 5 , 7 7 9 , w it h 1 0 , 5 20 , 5 7 8 t h o u s a nd c o m m o n s h a r es is s u ed.

O n N o v em b er 3 0 , 20 1 5 , t h e B a nk m er g er ed w it h C T B C I ns u r a nc e B r o k er s C o . , L t d. b y is s u ing 5 2, 3 5 0 t h o u s a nd c o m m o n s h a r es t o exc h a ng e f o r t h e s h a r es o f C T B C I ns u r a nc e B r o k er s C o . , L t d. O n M a y 26 , 20 1 5 , t h e B a nk ’ s b o a r d o f dir ec t o r s , o n b eh a l f o f s t o c k h o l der s , dec ided a c a pit a l inc r ea s e o f 1 , 4 1 1 , 3 0 0 t h o u s a nd s h a r es f r o m r et a ined ea r ning s w h ic h a m o u nt ed t o $ 1 4 , 1 1 3 , 0 0 4 , w it h Au g u s t 6 , 20 1 5 a s it s b a s el ine f o r c a pit a l inc r ea s e.

O n M a y 1 2, 20 1 4 , t h e B a nk ’ s b o a r d o f dir ec t o r s , o n b eh a l f o f s t o c k h o l der s , dec ided a c a pit a l inc r ea s e o f 6 4 6 , 9 8 8 t h o u s a nd s h a r es f r o m r et a ined ea r ning s w h ic h a m o u nt ed t o $ 6 , 4 6 9 , 8 7 8 , w it h Au g u s t 28 , 20 1 4 a s it s b a s el ine f o r c a pit a l inc r ea s e. O n J a nu a r y 22, 20 1 4 , t h e B a nk ’ s b o a r d o f dir ec t o r s , o n b eh a l f o f s t o c k h o l der s , dec ided a c a pit a l inc r ea s e b y c a s h o f 6 0 0 , 0 0 0 t h o u s a nd c o m m o n s h a r es , pa r v a l u e N T D 1 0 per s h a r e, w it h t h e pr ic e o f pr iv a t e pl a c em ent a t N T D 25 per s h a r e. T h e t o t a l a m o u nt r a is ed w a s $ 1 5 b il l io n, w it h M a y 1 3 , 20 1 4 a s it s b a s el ine f o r c a pit a l inc r ea s e.

( b ) C a pit a l s u r pl u s

T h e c o m po nent s a nd s o u r c es o f c a pit a l s u r pl u s w er e a s f o l l o w s :

December 31,2015 December 31, 2014 Addit io na l pa id- in c a pit a l －s t o c k $ 26 , 9 1 1 , 5 4 5 25 , 0 0 0 , 5 6 8 S h a r e- b a s ed pa y m ent t r a ns a c t io ns 1 , 1 8 4 , 26 4 1 , 1 8 4 , 26 4 O t h er s ( 2, 7 7 3 ) ( 2, 7 7 3 ) T o t a l $ 28,093,036 26,182,059

59


5 9

I n c o m pl ia nc e w it h t h e C o m pa ny Ac t , c a pit a l s u r pl u s c a n o nl y b e u s ed t o o f f s et a def ic it w h en s u r pl u s r es er v e is no t s u f f ic ient t o o f f s et l o s s es o r t o b e dis t r ib u t ed b y is s u ing new s h a r es o r b y c a s h pu r s u a nt t o a r es o l u t io n t o b e a do pt ed b y a s h a r eh o l der s ’ m eet ing a s r eq u ir ed in Ar t ic l e 24 1 , P a r a g r a ph 1 o f t h e C o m pa ny Ac t . F u r t h er m o r e, a c c o r ding t o Ar t ic l e 7 2- 1 , P a r a g r a ph 1 o f t h e R eg u l a t io ns G o v er ning t h e O f f er ing a nd I s s u a nc e o f S ec u r it ies b y S ec u r it ies I s s u er s , t h e a m o u nt o f c a pit a l s u r pl u s t o b e u s ed t o inc r ea s e c a pit a l s h a l l no t exc eed 1 0 % o f t o t a l pa id- in c a pit a l . T h e c a pit a l s u r pl u s a r is ing f r o m a c a pit a l inc r ea s e c a n b e c a pit a l iz ed o nl y in t h e f o l l o w ing f is c a l y ea r a f t er b eing r eg is t er ed b y t h e C o m pa ny w it h t h e c o m pet ent a u t h o r it y f o r a ppr o v a l .

( c ) O t h er eq u it y int er es t

C h a ng es in t h e B a nk ’ s o t h er eq u it y int er es t w er e a s b el o w :

Unreal iz ed (l os s es ) gains on

av ail abl e- f or- s al e f inancial as s ets

Ex change

dif f erences of ov ers eas

s u bs idiaries ’ f inancial rep orts

trans l ation

Changes in f inancial l iabil ities des ignated at f air

v al u e throu gh p rof it or l os s

attribu tabl e to credit ris k

Total J a nu a r y 1 , 20 1 5 $ ( 7 7 5 , 6 3 6 ) ( 3 , 5 3 7 , 1 1 6 ) 4 6 4 , 0 1 2 ( 3 , 8 4 8 , 7 4 0 ) Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net － V a l u a t io n a dj u s t m ent 1 , 0 27 , 5 4 9 - - 1 , 0 27 , 5 4 9 － R ea l iz ed a m o u nt ( 1 , 3 29 , 6 4 0 ) - - ( 1 , 3 29 , 6 4 0 ) F o r ei g n c u r r enc y t r a ns l a t io n dif f er enc e － E xc h a ng e dif f er enc e - 2, 5 8 6 , 0 3 0 - 2, 5 8 6 , 0 3 0 － L o s s e s o n ef f ec t iv e h edg ing

ins t r u m ent - ( 8 0 1 , 5 4 7 ) - ( 8 0 1 , 5 4 7 )

－ R ec l a s s if ied l o s s e s o f h edg ing ins t r u m ent s t o pr o f it o r l o s s a s dis po s a l o f f o r ei g n o per a t io n

- ( 6 , 8 3 3 ) - ( 6 , 8 3 3 )

－ R ec l a s s if ied exc h a ng e dif f er enc es t o pr o f it o r l o s s a s dis po s a l o f f o r ei g n o per a t io n

- 3 9 , 7 6 5 - 3 9 , 7 6 5

P r o po r t io na t e s h a r e o f o t h e r c o m pr eh ens iv e inc o m e f r o m a s s o c ia t es u nder eq u it y m et h o d

－ R ec o g niz ed a m o u nt 3 1 6 , 1 7 8 - - 3 1 6 , 1 7 8 C h a ng es in des ig na t ed a s f ina nc ia l

l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s a t t r ib u t a b l e t o c r edit r is k

－ R ec o g niz ed a m o u nt - - 1 , 1 5 0 , 7 29 1 , 1 5 0 , 7 29 D ec em b er 3 1 , 20 1 5 $ (761,549) (1,719,701) 1,614,741 (866,509)

60


6 0



Ex change



trans l ation




Total J a nu a r y 1 , 20 1 4 $ ( 4 8 9 , 8 0 6 ) ( 4 , 1 1 9 , 0 9 6 ) - ( 4 , 6 0 8 , 9 0 2) Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net － V a l u a t io n a dj u s t m ent 1 , 3 22, 4 8 4 - - 1 , 3 22, 4 8 4 － R ea l iz ed a m o u nt ( 1 , 6 5 1 , 9 0 4 ) - - ( 1 , 6 5 1 , 9 0 4 ) F o r ei g n c u r r enc y t r a ns l a t io n dif f er enc e － E xc h a ng e dif f er enc e - ( 23 5 , 8 8 1 ) - ( 23 5 , 8 8 1 ) － G a ins o n ef f ec t iv e h edg ing

ins t r u m ent - 8 1 7 , 8 6 1 - 8 1 7 , 8 6 1


－ R ec o g niz ed a m o u nt 4 3 , 5 9 0 - - 4 3 , 5 9 0 C h a ng es in des ig na t ed a s f ina nc ia l


- - - -

－ R ec o g niz ed a m o u nt - - 4 6 4 , 0 1 2 4 6 4 , 0 1 2 D ec em b er 3 1 , 20 1 4 $ (775,636) (3,537,116) 464,012 (3,848,740)

( AE ) E a r ning s dis t r ib u t io n a nd div idend po l ic y

As a s u b s idia r y o f C T B C F ina nc ia l H o l ding C o . , L t d. , t h e B a nk is r eq u ir ed t o f u l f il l t h e o per a t ing f u nd dem a nds o f t h e pa r ent c o m pa ny a nd t o m a int a in it s o w n c a pit a l a deq u a c y r a t io . T h er ef o r e, c o m m o n s t o c k div idends a nd b o nu s es a r e g ener a l l y dis t r ib u t ed a s c a s h div idends . T h e B a nk a do pt s a c o ns t a nt a nd b a l a nc ed div idend po l ic y t h r o u g h a nnu a l c o m m o n s t o c k div idends a nd dis t r ib u t io n o f b o nu s es . T h e a b o v e- m ent io ned m et h o do l o g y is m er el y a g u idel ine u s ed t o s el ec t a n a ppr o pr ia t e div idend po l ic y . I n c o ns ider a t io n o f c u r r ent o per a t io ns a nd c a pit a l b u dg et pl a nning f o r t h e next y ea r , a n a ppr o pr ia t e div idend dis t r ib u t io n r a t io is s el ec t ed.

Annu a l ea r ning s , if a ny , a r e u s ed t o pa y t a xes , t o m a k e c er t a in a dj u s t m ent s in a c c o r da nc e w it h f ina nc ia l a c c o u nt ing s t a nda r ds , a nd t o o f f s et c u m u l a t iv e l o s s es . T h en 3 0 % o f t h e r em a ining ea r ning s a r e a ppr o pr ia t ed a s l eg a l r es er v e a nd s et pr o v is io n f o r o r r ev er s a l o f s pec ia l r es er v e a c c o r ding t o t h e r eg u l a t io ns . S u b s eq u ent t o a l l a ppr o pr ia t io ns a f o r es a id, t h e r em a ining b a l a nc e a nd t h e u ndis t r ib u t ed ea r ning s a t t h e b eg inning per io d s h o u l d r epo r t t o t h e b o a r d o f dir ec t o r s f o r t h e dis c u s s io n o f div idend dis t r ib u t io n a h ea d o f s eek ing a ppr o v a l f r o m s h a r eh o l der s . B ef o r e t h e l eg a l r es er v e b a l a nc e r ea c h es a n a m o u nt eq u a l t o t o t a l pa id- in c a pit a l , c a s h div idends a r e l im it ed t o 1 5 % o f t o t a l pa id- in c a pit a l . W h en t h e l eg a l r es er v e b a l a nc e r ea c h es a n a m o u nt eq u a l t o t o t a l pa id- in c a pit a l , o r s a t is f ies t h e Ar t ic l e 5 0 , pa r a g r a ph 2 o f t h e B a nk ing L a w , if t h e b a nk is s o u nd in b o t h it s f ina nc e a nd b u s ines s o per a t io ns a nd h a s s et a s ide l eg a l r es er v e in c o m pl ia nc e w it h t h e C o m pa ny Ac t , t h e r es t r ic t io ns s t ipu l a t ed in t h e pr ec eding pa r a g r a ph s h a l l no t a ppl y .

A r es o l u t io n o n 20 1 3 ea r ning s dis t r ib u t io n o f t h e B a nk w a s a ppr o v ed b y t h e b o a r d o f dir ec t o r s o n M a y 1 2, 20 1 4 , a nd s t o c k div idend a nd em pl o y ee b o nu s es w er e dis t r ib u t ed, a m o u nt ing t o $ 6 , 4 6 9 , 8 7 8 a nd $ 3 , 23 5 , r es pec t iv el y . N ev er t h el es s , t h e es t im a t e o f em pl o y ee b o nu s es r ec o g niz ed in t h e a nnu a l f ina nc ia l r epo r t o f 20 1 3 w a s $ 3 , 21 8 , w it h $ 1 7 dif f er enc e. T h e dif f er enc e is r eg a r ded a s a c h a ng e o f a c c o u nt ing es t im a t es a nd w il l r ef l ec t a s a l o s s in t h e f is c a l y ea r o f 20 1 4 .


6 0



Ex change



trans l ation




Total J a nu a r y 1 , 20 1 4 $ ( 4 8 9 , 8 0 6 ) ( 4 , 1 1 9 , 0 9 6 ) - ( 4 , 6 0 8 , 9 0 2) Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net － V a l u a t io n a dj u s t m ent 1 , 3 22, 4 8 4 - - 1 , 3 22, 4 8 4 － R ea l iz ed a m o u nt ( 1 , 6 5 1 , 9 0 4 ) - - ( 1 , 6 5 1 , 9 0 4 ) F o r ei g n c u r r enc y t r a ns l a t io n dif f er enc e － E xc h a ng e dif f er enc e - ( 23 5 , 8 8 1 ) - ( 23 5 , 8 8 1 ) － G a ins o n ef f ec t iv e h edg ing

ins t r u m ent - 8 1 7 , 8 6 1 - 8 1 7 , 8 6 1


－ R ec o g niz ed a m o u nt 4 3 , 5 9 0 - - 4 3 , 5 9 0 C h a ng es in des ig na t ed a s f ina nc ia l


- - - -

－ R ec o g niz ed a m o u nt - - 4 6 4 , 0 1 2 4 6 4 , 0 1 2 D ec em b er 3 1 , 20 1 4 $ (775,636) (3,537,116) 464,012 (3,848,740)

( AE ) E a r ning s dis t r ib u t io n a nd div idend po l ic y

As a s u b s idia r y o f C T B C F ina nc ia l H o l ding C o . , L t d. , t h e B a nk is r eq u ir ed t o f u l f il l t h e o per a t ing f u nd dem a nds o f t h e pa r ent c o m pa ny a nd t o m a int a in it s o w n c a pit a l a deq u a c y r a t io . T h er ef o r e, c o m m o n s t o c k div idends a nd b o nu s es a r e g ener a l l y dis t r ib u t ed a s c a s h div idends . T h e B a nk a do pt s a c o ns t a nt a nd b a l a nc ed div idend po l ic y t h r o u g h a nnu a l c o m m o n s t o c k div idends a nd dis t r ib u t io n o f b o nu s es . T h e a b o v e- m ent io ned m et h o do l o g y is m er el y a g u idel ine u s ed t o s el ec t a n a ppr o pr ia t e div idend po l ic y . I n c o ns ider a t io n o f c u r r ent o per a t io ns a nd c a pit a l b u dg et pl a nning f o r t h e next y ea r , a n a ppr o pr ia t e div idend dis t r ib u t io n r a t io is s el ec t ed.

Annu a l ea r ning s , if a ny , a r e u s ed t o pa y t a xes , t o m a k e c er t a in a dj u s t m ent s in a c c o r da nc e w it h f ina nc ia l a c c o u nt ing s t a nda r ds , a nd t o o f f s et c u m u l a t iv e l o s s es . T h en 3 0 % o f t h e r em a ining ea r ning s a r e a ppr o pr ia t ed a s l eg a l r es er v e a nd s et pr o v is io n f o r o r r ev er s a l o f s pec ia l r es er v e a c c o r ding t o t h e r eg u l a t io ns . S u b s eq u ent t o a l l a ppr o pr ia t io ns a f o r es a id, t h e r em a ining b a l a nc e a nd t h e u ndis t r ib u t ed ea r ning s a t t h e b eg inning per io d s h o u l d r epo r t t o t h e b o a r d o f dir ec t o r s f o r t h e dis c u s s io n o f div idend dis t r ib u t io n a h ea d o f s eek ing a ppr o v a l f r o m s h a r eh o l der s . B ef o r e t h e l eg a l r es er v e b a l a nc e r ea c h es a n a m o u nt eq u a l t o t o t a l pa id- in c a pit a l , c a s h div idends a r e l im it ed t o 1 5 % o f t o t a l pa id- in c a pit a l . W h en t h e l eg a l r es er v e b a l a nc e r ea c h es a n a m o u nt eq u a l t o t o t a l pa id- in c a pit a l , o r s a t is f ies t h e Ar t ic l e 5 0 , pa r a g r a ph 2 o f t h e B a nk ing L a w , if t h e b a nk is s o u nd in b o t h it s f ina nc e a nd b u s ines s o per a t io ns a nd h a s s et a s ide l eg a l r es er v e in c o m pl ia nc e w it h t h e C o m pa ny Ac t , t h e r es t r ic t io ns s t ipu l a t ed in t h e pr ec eding pa r a g r a ph s h a l l no t a ppl y .

A r es o l u t io n o n 20 1 3 ea r ning s dis t r ib u t io n o f t h e B a nk w a s a ppr o v ed b y t h e b o a r d o f dir ec t o r s o n M a y 1 2, 20 1 4 , a nd s t o c k div idend a nd em pl o y ee b o nu s es w er e dis t r ib u t ed, a m o u nt ing t o $ 6 , 4 6 9 , 8 7 8 a nd $ 3 , 23 5 , r es pec t iv el y . N ev er t h el es s , t h e es t im a t e o f em pl o y ee b o nu s es r ec o g niz ed in t h e a nnu a l f ina nc ia l r epo r t o f 20 1 3 w a s $ 3 , 21 8 , w it h $ 1 7 dif f er enc e. T h e dif f er enc e is r eg a r ded a s a c h a ng e o f a c c o u nt ing es t im a t es a nd w il l r ef l ec t a s a l o s s in t h e f is c a l y ea r o f 20 1 4 .

61


6 1

A r es o l u t io n o n 20 1 4 ea r ning s dis t r ib u t io n o f t h e B a nk w a s a ppr o v ed b y t h e b o a r d o f dir ec t o r s o n M a y 26 , 20 1 5 , a nd s t o c k div idend a nd em pl o y ee b o nu s es w er e dis t r ib u t ed, a m o u nt ing t o $ 1 4 , 1 1 3 , 0 0 4 a nd $ 7 , 1 8 7 , r es pec t iv el y . N ev er t h el es s , t h e es t im a t e o f em pl o y ee b o nu s es r ec o g niz ed in t h e a nnu a l f ina nc ia l r epo r t o f 20 1 4 w a s $ 4 , 9 7 3 , w it h $ 2, 21 4 dif f er enc e. T h e dif f er enc e is r eg a r ded a s a c h a ng e o f a c c o u nt ing es t im a t es a nd w il l r ef l ec t a s a l o s s in t h e f is c a l y ea r o f 20 1 5 . Ac c o r ding t o t h e C o m pa ny Ac t , a m ended in M a y , 20 1 5 , em pl o y ee c o m pens a t io ns a r e exc l u ded f r o m t h e s c o pe o f ea r ning s dis t r ib u t io n, t h e B a nk h a s r ev is ed t h e a r t ic l es o f inc o r po r a t io n t o m eet t h e r eg u l a t o r y dea dl ine.

R el ev a nt inf o r m a t io n a b o u t em pl o y ee b o nu s es a ppr o v ed b y t h e b o a r d o f dir ec t o r s o n b eh a l f o f s t o c k h o l der s is a v a il a b l e o n M a r k et O b s er v a t io n P o s t S y s t em o r o t h er s it es .

( AF ) S h a r e b a s ed pa y m ent t r a ns a c t io ns

F o r t h e y er ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e B a nk a nd it s s u b s idia r ies h a d s et o u t t h e m ea s u r em ent pr inc ipl es a nd s pec if ic r eq u ir em ent s f o r t h e s h a r e- b a s ed pa y m ent t r a ns a c t io ns a s b el o w : Management s tock ap p reciation rights p l an f or the years 2011 2012 2013 2014

G r a nt da t e 0 1 . 1 3 . 20 1 2 0 2. 0 5 . 20 1 3 0 1 . 28 . 20 1 4 0 2. 0 6 . 20 1 5 G r a nt nu m b er 9 3 , 5 8 3 1 3 9 , 5 3 5 1 9 2, 7 7 8 23 9 , 9 6 5 E xer c is e per io d 1 2. 3 1 . 20 1 4 1 2. 3 1 . 20 1 5 1 2. 3 1 . 20 1 6 1 2. 3 1 . 20 1 7 E xer c is e pr ic e a t g r a nt da t e 1 9 . 0 5 1 6 . 6 9 20 . 0 7 20 . 3 5

T h e B a nk a nd it s s u b s idia r ies im pl em ent t h e a b o v e pl a n v ia c a s h s et t l em ent s , y et a b s ent ee a nd r es ig ned em pl o y ees ’ s t o c k a ppr ec ia t io n r ig h t s w il l b e deem ed a b a ndo ned a nd f o r f eit ed.

D is c l o s u r es f o r t h e B a nk a nd it s s u b s idia r ies ’ E m pl o y ee S t o c k Appr ec ia t io n R ig h t s P l a n ( S AR s ) :

For the year ended December 31, 2015 Management s tock ap p reciation rights p l an f or the years 2012 2013 2014

Nu mber

W eighted-av erage ex ercis e

p rice

Nu mber


p rice

Nu mber


p rice O u t s t a nding a t t h e b eg inning o f t h e

per io d 1 5 7 , 7 7 3 1 2. 5 3 20 0 , 0 26 1 6 . 9 7 23 9 , 9 6 5 1 8 . 1 9

G r a nt ed du r ing t h e per io d 1 8 , 1 9 4 1 2. 5 3 23 , 6 1 7 1 6 . 9 7 28 , 3 29 1 8 . 1 9 F o r f eit ed du r ing t h e per io d 1 , 0 0 0 1 2. 5 3 1 , 8 6 3 1 6 . 9 7 2, 3 5 0 1 8 . 1 9 E xer c is ed du r ing t h e per io d 1 7 4 , 9 6 7 1 2. 5 3 1 , 9 22 1 6 . 9 7 1 , 8 6 8 1 8 . 1 9 E xpir ed du r ing t h e per io d - 1 2. 5 3 - 1 6 . 9 7 - 1 8 . 1 9 O u t s t a nding a t t h e end o f t h e per io d - 1 2. 5 3 21 9 , 8 5 8 1 6 . 9 7 26 4 , 0 7 6 1 8 . 1 9 E xer c is a b l e a t t h e end o f t h e per io d - 1 2. 5 3 - 1 6 . 9 7 - 1 8 . 1 9

62


6 2

For the year ended December 31, 2014 Management s tock ap p reciation rights p l an f or the years 2011 2012 2013

Nu mber


p rice

Nu mber


p rice

Nu mber


p rice O u t s t a nding a t t h e b eg inning o f t h e

per io d 1 0 5 , 4 3 5 1 4 . 23 1 5 1 , 7 7 7 1 4 . 0 2 1 9 2, 7 7 8 1 8 . 9 9

G r a nt ed du r ing t h e per io d 6 , 0 5 5 1 4 . 23 8 , 5 8 0 1 4 . 0 2 1 0 , 9 3 5 1 8 . 9 9 F o r f eit ed du r ing t h e per io d 1 , 1 28 1 4 . 23 1 , 7 8 3 1 4 . 0 2 3 , 0 20 1 8 . 9 9 E xer c is ed du r ing t h e per io d 1 1 0 , 3 6 2 1 4 . 23 8 0 1 1 4 . 0 2 6 6 7 1 8 . 9 9 E xpir ed du r ing t h e per io d - 1 4 . 23 - 1 4 . 0 2 - 1 8 . 9 9 O u t s t a nding a t t h e end o f t h e per io d - 1 4 . 23 1 5 7 , 7 7 3 1 4 . 0 2 20 0 , 0 26 1 8 . 9 9 E xer c is a b l e a t t h e end o f t h e per io d - 1 4 . 23 - 1 4 . 0 2 - 1 8 . 9 9

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 , t h e w eig h t ed- a v er a g e s t o c k pr ic es exec u t ed u nder S AR s f o r 20 1 2, 20 1 3 a nd 20 1 4 w er e N T $ 1 7 . 7 7 , $ 20 . 5 5 a nd $ 21 . 4 0 ( do l l a r s ) , r es pec t iv el y . U p t o D ec em b er 3 1 , 20 1 5 , t h e w eig h t ed- a v er a g e r em a ining du r a t io ns o f o u t s t a nding s h a r es u nder S AR s f o r 20 1 3 a nd 20 1 4 w er e 1 a nd 2 y ea r s , r es pec t iv el y . O n J a nu a r y 27 , 20 1 6 , t h e B a nk ’ s b o a r d o f dir ec t o r s h a s pa s s ed M a na g em ent S t o c k Appr ec ia t io n R ig h t s P l a n f o r t h e Y ea r 20 1 5 . 225 , 5 6 4 u nit s o f s h a r e b a s ed pa y m ent h a v e b een g r a nt ed, w it h t h e exec u t io n pr ic e o f N T $ 1 4 . 9 2 ( do l l a r s ) . O n t h e exec u t io n da t e o f D ec em b er 3 1 , 20 1 8 , t h e pl a n is int ended t o b e s et t l ed t h r o u g h c a s h pa y m ent s .

( AG ) E P S For the year ended December 31 2015 2014 N et inc o m e a t t r ib u t a b l e t o c o m m o n s t o c k h o l der s $ 34,240,268 36,868,148

W eig h t ed- a v er a g e o u t s t a nding s h a r es o f c o m m o n s t o c k ( in t h o u s a nds ) 10,572,928 10,303,488 B a s ic E P S ( in do l l a r s ) $ 3.24 3.58 R et r o a c t iv e a dj u s t m ent s a r e a ppl ied t o t h e B a nk ’ s b a s ic E P S f o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 . S inc e t h e B a nk a nd it s s u b s idia r ies dea l w it h s h a r e- b a s ed pa y m ent t r a ns a c t io ns v ia c a s h s et t l em ent , no im pa c t is expec t ed t o b e o n it s w eig h t ed- a v er a g e o u t s t a nding s h a r es , no r do es t h e dil u t ed E P S needed t o b e c a l c u l a t ed.

63


6 3

( AH ) N et int er es t inc o m e For the year ended December 31 2015 2014 Interes t income L o a n $ 4 9 , 4 8 0 , 6 26 4 2, 5 8 8 , 7 6 1 R ev o l v ing c r edit 2, 6 4 1 , 4 7 6 2, 8 3 5 , 3 7 3 S ec u r it ies 6 , 7 9 4 , 0 1 6 5 , 1 6 7 , 0 5 3 D u e f r o m C ent r a l B a nk 3 6 5 , 9 3 6 3 3 4 , 3 5 3 D u e f r o m b a nk s a nd c a l l l o a ns t o b a nk s 2, 1 8 4 , 4 0 1 4 , 1 5 7 , 5 4 9 H edg ing der iv a t iv es 3 5 0 , 0 6 9 1 , 0 4 8 , 3 5 7 O t h er s 2, 1 1 7 , 21 7 2, 7 0 1 , 7 27 S u b t o t a l 6 3 , 9 3 3 , 7 4 1 5 8 , 8 3 3 , 1 7 3 Interes t ex p ens e D epo s it 1 7 , 1 28 , 4 7 2 1 6 , 5 4 4 , 4 4 6 D u e t o o t h er b a nk s 3 1 7 , 5 7 7 3 6 6 , 1 5 0 B o r r o w ing s a nd o t h er f ina nc ing 3 , 20 4 , 0 3 1 3 , 3 3 9 , 7 4 7 H edg ing der iv a t iv es 1 3 3 , 5 6 9 27 6 , 0 6 4 O t h er s 7 6 , 29 6 4 0 , 4 8 2 S u b t o t a l 20 , 8 5 9 , 9 4 5 20 , 5 6 6 , 8 8 9 $ 43,073,796 38,266,284 I nt er es t inc o m e a nd expens e f r o m f ina nc ia l a s s et s a nd l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it a nd l o s s a r e exc l u ded.

( AI ) S er v ic e f ee a nd c o m m is s io n inc o m e

For the year ended December 31 2015 2014 Commis s ion income C r edit c a r d b u s ines s $ 5 , 1 9 8 , 0 3 3 4 , 8 0 2, 3 9 2 W ea l t h m a na g em ent b u s ines s 6 , 226 , 4 7 7 6 , 0 3 7 , 8 0 2 C o r po r a t e b u s ines s 5 , 21 6 , 9 6 0 4 , 1 28 , 5 4 0 B a nk ing b u s ines s 4 , 5 3 8 , 220 3 , 8 8 1 , 5 5 3 I ns u r a nc e b u s ines s 1 0 , 9 3 7 , 4 20 1 0 , 0 8 3 , 5 21 L o t t er y b u s ines s 5 , 6 7 6 , 4 5 3 5 , 3 5 9 , 5 5 0 O t h er s 1 8 , 25 3 7 , 7 9 8 T o t a l c o m m is s io n inc o m e 3 7 , 8 1 1 , 8 1 6 3 4 , 3 0 1 , 1 5 6 Serv ice f ee C r edit c a r d b u s ines s ( 28 8 , 9 3 0 ) ( 224 , 6 3 6 ) W ea l t h m a na g em ent b u s ines s ( 21 4 , 1 9 2) ( 27 8 , 9 1 9 ) C o r po r a t e b u s ines s ( 26 0 , 9 0 4 ) ( 24 6 , 3 5 4 ) B a nk ing b u s ines s ( 1 , 9 0 9 , 0 1 1 ) ( 1 , 4 1 3 , 0 9 5 ) L o t t er y b u s ines s ( 4 3 3 , 8 7 4 ) ( 4 0 2, 7 4 2) I ns u r a nc e b u s ines s - ( 3 27 ) O t h er s ( 1 0 , 0 1 9 ) ( 1 7 , 3 4 5 ) T o t a l s er v ic e f ee ( 3 , 1 1 6 , 9 3 0 ) ( 2, 5 8 3 , 4 1 8 ) S er v ic e f ee a nd c o m m is s io n inc o m e $ 34,694,886 31,717,738

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , t h e s er v ic e f ee a nd c o m m is s io n inc o m e h a v e b een r ec l a s s if ied pr o per l y b y f o l l o w ing t h e s a m e pr es ent a t io n a s c u r r ent f ina nc ia l r epo r t .

64


6 4

( AJ ) G a ins a nd l o s s es o n f ina nc ia l a s s et s o r l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s For the year ended December 31 2015 2014 Dis p os al gains (l os s es ) C o m m er c ia l pa per $ 1 6 , 9 3 6 6 , 1 4 3 T r ea s u r y b il l s ( 1 3 0 ) 24 1 G o v er nm ent b o nds 26 , 7 1 5 ( 7 9 , 21 7 ) C o r p o r a t e b o nds 4 4 , 9 26 20 , 0 7 0 F ina nc ia l deb ent u r es 6 7 , 3 9 1 3 6 , 1 9 0 C o n v er t ib l e b o nds 5 , 1 5 1 9 , 5 6 9 B enef ic ia r y c er t if ic a t es ( 1 9 , 4 8 1 ) ( 5 1 ) L is t ed a nd O T C s ec u r it ies ( 4 2, 8 6 4 ) 21 9 , 0 1 2 O t h er s ec u r it ies a nd b o nds 3 , 25 0 1 , 0 27 D er iv a t iv e f ina nc ia l ins t r u m ent s 1 1 , 9 1 7 , 5 7 5 5 , 26 5 , 5 0 5 B o r r o w ed s ec u r it ies 1 , 6 4 1 ( 1 0 , 20 5 ) S u b t o t a l 1 2, 0 21 , 1 1 0 5 , 4 6 8 , 28 4 V al u ation gains (l os s es ) C o m m er c ia l pa per ( 21 , 8 5 8 ) 4 , 1 1 4 T r ea s u r y b il l s 24 0 ( 23 4 ) G o v er nm ent b o nds 5 , 1 0 7 3 8 , 8 8 2 C o r p o r a t e b o nds ( 7 7 , 9 9 9 ) ( 1 4 , 23 2) F ina nc ia l deb ent u r es 2, 1 5 7 , 3 7 2 2, 6 0 1 , 5 8 4 C o n v er t ib l e b o nds ( 1 6 5 , 0 8 1 ) 5 6 , 7 9 2 L is t ed a nd O T C s ec u r it ies 4 , 4 6 1 ( 7 9 , 5 5 3 ) O t h er s ec u r it ies a nd b o nds 9 , 6 7 0 ( 3 1 , 9 9 4 ) D er iv a t iv e f ina nc ia l ins t r u m ent s ( 1 , 3 5 6 , 8 7 4 ) 3 , 5 0 3 , 3 4 2 B enef ic ia r y c er t if ic a t es ( 1 9 , 9 0 5 ) 1 7 , 9 4 6 B o r r o w ed s ec u r it ies - 7 2 F a ir v a l u e h edg e a dj u s t m ent ( 9 1 , 3 23 ) ( 6 5 8 , 3 3 4 ) S u b t o t a l 4 4 3 , 8 1 0 5 , 4 3 8 , 3 8 5 Div idend income 1 , 3 5 7 1 3 , 24 1 Interes t income 5 4 1 , 4 7 9 5 5 7 , 7 3 5 Interes t ex p ens e ( 1 , 8 0 0 , 21 3 ) ( 1 8 5 , 4 5 7 ) T o t a l $ 11,207,543 11,292,188

( AK ) E m pl o y ee b enef it s expens es

For the year ended December 31 2015 2014 S a l a r y expens es $ 22, 0 8 5 , 0 7 0 1 9 , 8 8 2, 8 0 0 I ns u r a nc e expens es 1 , 6 27 , 1 5 2 1 , 3 6 8 , 1 4 0 S h a r e b a s ed pa y m ent t r a ns a c t io ns 25 7 , 8 6 2 9 7 4 , 5 1 8 R et ir em ent expens es D ef ined c o nt r ib u t io n pl a n 6 0 1 , 6 1 9 4 9 3 , 25 2 D ef ined b enef it s pl a n 3 6 2, 5 5 2 3 6 0 , 7 8 8 O t h er per s o nnel expens es 1 , 4 24 , 7 8 2 1 , 3 3 1 , 1 9 9 T o t a l $ 26,359,037 24,410,697

As o f D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , nu m b er s o f t h e B a nk a nd it s s u b s idia r ies ’ em pl o y ees w er e 1 3 , 7 9 4 a nd 1 3 , 4 3 9 , r es pec t iv el y .

65


6 5

( AL ) D epr ec ia t io n a nd a m o r t iz a t io n expens es

For the year ended December 31 2015 2014 H o u s ing $ 8 9 8 , 25 6 5 4 5 , 8 8 9 G ener a l eq u ipm ent 3 8 8 , 3 8 2 28 9 , 4 5 0 T r a ns po r t a t io n eq u ipm ent 3 7 , 8 7 5 3 0 , 4 26 I nf o r m a t io n eq u ipm ent 6 0 3 , 6 4 1 4 7 4 , 5 9 8 S u b t o t a l o f depr ec ia t io n expens es 1 , 9 28 , 1 5 4 1 , 3 4 0 , 3 6 3 Am o r t iz a t io n o f inf o r m a t io n s o f t w a r e 1 , 0 4 6 , 4 4 9 7 3 2, 4 8 6 B o nd is s u a nc e expens es a nd o t h er s 4 , 6 1 2 1 7 , 8 7 2 T o t a l $ 2,979,215 2,090,721

( AM ) C o m pens a t io ns o f em pl o y ees

Annu a l ea r ning s , if a ny , s h o u l d b e a ppr o pr ia t ed 0 . 0 5 % a s c o m pens a t io ns o f em pl o y ees . H o w ev er , if t h er e is a ny c u m u l a t iv e l o s s , t h e B a nk s h o u l d o f f s et c u m u l a t iv e l o s s es in pr io r it y . C o m pens a t io ns o f em pl o y ees w h ic h a r e r ec o g niz ed a s c u r r ent per io d o per a t ing expens es b a s ed o n t h e B a nk ’ s net inc o m e b ef o r e t a x exc l u ding t h e a m o u nt o f t h e c o m pens a t io ns o f em pl o y ees a t t h e end o f t h e a c c o u nt ing per io d m u l t ipl ied b y t h e es t im a t e o f r em u ner a t io n dis t r ib u t io n s et b y t h e B a nk ’ s a r t ic l es o f inc o r po r a t io n. R el ev a nt inf o r m a t io n is a v a il a b l e o n M a r k et O b s er v a t io n P o s t s y s t em . Any dif f er enc e l ies b et w een t h e a c t u a l a l l o c a t io n a m o u nt a nd pr ev io u s l y r ec o g niz ed in t h e f ina nc ia l r epo r t is c o ns ider ed a s c h a ng e in a c c o u nt ing es t im a t es w h ic h is t h en r ec o g niz ed a s pr o f it o r l o s s in next y ea r .

( AN ) O t h er g ener a l a nd a dm inis t r a t iv e expens es

For the year ended December 31 2015 2014 S it e u s a g e a nd g ener a l eq u ipm ent expens es $ 4 , 8 6 5 , 7 0 9 4 , 1 1 9 , 0 4 4 I nf o r m a t io n eq u ipm ent expens es 1 , 8 0 5 , 23 3 1 , 4 6 6 , 8 5 3 G ener a l a dm inis t r a t io n expens es 4 , 3 5 2, 7 5 9 3 , 8 24 , 7 25 M a r k et ing a nd pr o m o t io n expens es 2, 7 6 4 , 8 4 1 2, 5 6 3 , 9 3 8 O t h er expens es 4 , 8 9 4 , 29 5 4 , 7 0 6 , 6 4 8 B u s ines s t a x 3 , 4 8 1 , 29 0 2, 6 5 0 , 8 26 T o t a l $ 22,164,127 19,332,034

( AO ) F ina nc ia l ins t r u m ent s

( a ) M et h o ds a nd a s s u m pt io ns u s ed b y t h e B a nk a nd it s s u b s idia r ies f o r f a ir v a l u e ev a l u a t io n o f f ina nc ia l ins t r u m ent s w er e a s f o l l o w s :

1 . F a ir v a l u e o f s h o r t - t er m f ina nc ia l ins t r u m ent s is es t im a t ed b y t h eir b o o k v a l u e o n

t h e b a l a nc e s h eet da t e. S inc e t h es e ins t r u m ent s h a v e s h o r t m a t u r it ies , t h e b o o k v a l u e is a do pt ed a s a r ea s o na b l e b a s is in es t im a t ing t h e f a ir v a l u e. T h e m et h o d is a ppl ied t o c a s h a nd c a s h eq u iv a l ent s , du e f r o m C ent r a l B a nk a nd c a l l l o a ns t o b a nk s , s ec u r it ies pu r c h a s ed u nder r ev er s e r epu r c h a s e a g r eem ent s , r ec eiv a b l es , o t h er f ina nc ia l a s s et s , depo s it s f r o m C ent r a l B a nk a nd o t h er b a nk s , du e t o C ent r a l B a nk a nd o t h er b a nk s , s ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s , pa y a b l es , r em it t a nc es , a nd o t h er f ina nc ia l l ia b il it ies .

66


6 6

2. I f t h er e is a q u o t ed pr ic e in a n a c t iv e m a r k et f o r t h e f ina nc ia l a s s et , inc l u ding f ina nc ia l ins t r u m ent s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s , a v a il a b l e- f o r - s a l e, h el d- t o - m a t u r it y f ina nc ia l a s s et s , a nd h edg ing der iv a t iv e f ina nc ia l ins t r u m ent s , t h e q u o t ed pr ic e is r eg a r ded a s it s f a ir v a l u e. I f t h er e is no q u o t ed pr ic e in a n a c t iv e m a r k et f o r t h e f ina nc ia l a s s et , it s f a ir v a l u e is es t im a t ed o n t h e b a s is o f t h e r es u l t o f a v a l u a t io n t ec h niq u e t h a t r ef er s t o q u o t ed pr ic es pr o v ided b y f ina nc ia l ins t it u t io ns . T h e es t im a t es , h y po t h es es a nd dis c o u nt r a t es f o r v a l u a t io n r ef er r ing t o q u o t ed pr ic es , f r o m f ina nc ia l ins t it u t io ns , o f f ina nc ia l ins t r u m ent s h a v e s u b s t a nt ia l l y t h e s a m e t er m s a nd c h a r a c t er is t ic s , inc l u ding t h e c r edit q u a l it y o f deb t o r s , t h e r em a ining t er m o v er w h ic h t h e c o nt r a c t u a l int er es t r a t e is f ixed, t h e r em a ining t er m t o r epa y m ent o f t h e pr inc ipa l , a nd t h e c u r r enc y in w h ic h t h e pa y m ent s a r e t o b e m a de. F a ir v a l u e o f deb t inv es t m ent s w it h o u t a n a c t iv e m a r k et a c c o u nt ed f o r u nder o t h er f ina nc ia l a s s et s is det er m ined b y t h e q u o t ed es t im a t ed f a ir v a l u e f r o m t h e c o u nt er pa r t ies , a nd r ec o r ded in a c c o r da nc e w it h t h e “ R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f F ina nc ia l R epo r t s b y P u b l ic B a nk s , ” w h ic h r eq u ir ed t h e a m o u nt t o b e b o o k ed a t a m o r t iz ed c o s t . F a ir v a l u e f o r a n eq u it y inv es t m ent is det er m ined b a s ed o n eit h er t h e pr ic e c a l c u l a t ed u s ing a v a l u a t io n t ec h niq u e o r it s b o o k v a l u e.

3 . L o a ns a nd depo s it s a r e b o t h c l a s s if ied a s int er es t - b ea r ing f ina nc ia l a s s et s ; t h er ef o r e,

t h e b o o k v a l u e o f f ina nc ia l a s s et s is eq u iv a l ent t o t h eir f a ir v a l u e. T h e net b o o k v a l u e o f t h e no n- a c c r u a l a c c o u nt , a f t er dedu c t ing pr o v is io n f o r c r edit l o s s , is a do pt ed a s t h e f a ir v a l u e.

4 . F a ir v a l u e o f l o ng - t er m l ia b il it ies is es t im a t ed b y t h e pr es ent v a l u e o f expec t ed

f u t u r e c a s h f l o w s . T h e dis c o u nt r a t e is b a s ed o n r a t es o f eq u iv a l ent l o a ns a v a il a b l e el s ew h er e; t h a t is , l o a ns w it h s im il a r m a t u r it y da t e a nd t er m s ( c l o s e t o t h e m a t u r it y da t e) .

5 . D er iv a t iv es u s u a l l y a do pt m a r k - t o - m o del pr ic es . T h e D is c o u nt ed- C a s h - F l o w

m et h o d is a do pt ed f o r no n- o pt io n der iv a t iv es , a nd t h e B l a c k - S c h o l es m o del is a do pt ed f o r m o s t o pt io ns .

6 . T h e exc h a ng e pr ic e is u s ed f o r f ina nc ia l ins t r u m ent s t r a ded o n a n exc h a ng e.

O v er - t h e- c o u nt er ( O T C ) po s it io ns u s e independent pr ic e/ pa r a m et er q u o t es b y r el ia b l e b r o k er s o r da t a v endo r s , s u c h a s R eu t er s , B l o o m b er g , et c . I n g ener a l , t h e c l o s ing pr ic e, s et t l em ent pr ic e, m id- pr ic e a t a f ixed c u t - o f f t im e, a nd t h e a v er a g e pr ic e o f s ev er a l independent b r o k er s c o u l d b e u s ed a s m a r k et da t a f o r v a l u a t io n pu r po s es .

7 . T h e B a nk a nd it s s u b s idia r ies w o u l d c a l c u l a t e c r edit v a l u a t io n a dj u s t m ent ( C V A)

b y a s s es s ing pr o b a b il it y o f def a u l t ( P D ) a nd l o s s g iv en def a u l t ( L G D ) o f t h e c o u nt er pa r t y b ef o r e m u l t ipl y ing expo s u r e a t def a u l t ( E AD ) o f t h e c o u nt er pa r t y . O n t h e c o nt r a r y , deb it v a l u a t io n a dj u s t m ent ( D V A) is c o m pu t ed b y a ppl y ing pr o b a b il it y o f def a u l t o f t h e B a nk a nd it s s u b s idia r ies a nd c o ns ider ing l o s s g iv en def a u l t o f t h e B a nk a nd it s s u b s idia r ies b ef o r e b eing m u l t ipl ied b y expo s u r e a t def a u l t o f t h e B a nk a nd it s s u b s idia r ies .

67


6 7

T h e B a nk a nd it s s u b s idia r ies a do pt I AS 3 9 o r t a k e a ny o b s er v a b l e da t a int o a c c o u nt t o ev a l u a t e t h e pr o b a b il it y o f im pa ir m ent a nd l o s s r a t e o f a l l o w a nc e f o r do u b t f u l a c c o u nt s a s t h e es t im a t es o f P D a nd L G D . I n a ddit io n, m a r k t o m a r k et a s s es s m ent o f a der iv a t iv e ins t r u m ent f r o m O v er t h e C o u nt er ( O T C ) is a ppl ied a s E AD . F o r t h o s e a c c o u nt s h a v e s h o w ed s ig nif ic a nt inc r ea s e in c r edit r is k , w o u l d b e t h e C V A a s s es s m ent ed indiv idu a l l y b y t a k ing int o a c c o u nt o f t h e c h a ng es o f expo s u r es , c o ndit io ns o f c o l l a t er a l s a nd t h e r ec o v er y pr o b a b il it ies .

8 . E xc ept t h e f o l l o w ing l is t ed it em s , t h e b o o k v a l u e is c o ns ider ed t o b e a r ea s o na b l e

b a s is o f es t im a t ed f a ir v a l u e if t h e B a nk a nd it s s u b s idia r ies do no t m ea s u r e a f ina nc ia l ins t r u m ent a t f a ir v a l u e.

December 31, 2015 Financial As s ets Book v al u e Fair v al u e H el d- t o - m a t u r it y f ina nc ia l a s s et s －net $ 1 4 7 , 6 6 7 , 1 0 6 1 5 1 , 6 6 6 , 29 3

December 31,2014 Financial As s ets Book v al u e Fair v al u e H el d- t o - m a t u r it y f ina nc ia l a s s et s －net $ 7 1 , 1 5 4 , 3 27 7 1 , 1 0 8 , 7 8 6 O t h er f ina nc ia l a s s et s - I nv es t m ent in deb t ins t r u m ent s w it h o u t

a c t iv e m a r k et s 1 7 , 6 0 0 , 4 0 9 1 7 , 5 7 8 , 3 3 3

( b ) F a ir v a l u e h ier a r c h y inf o r m a t io n o n f ina nc ia l ins t r u m ent s

1 . T h e def init io n o f f a ir v a l u e h ier a r c h y ( A) L ev el 1

F a ir v a l u e m ea s u r em ent f o r a f ina nc ia l ins t r u m ent c l a s s if ied in L ev el 1 is det er m ined a s t h e q u o t ed pr ic e f o r a n ident ic a l f ina nc ia l ins t r u m ent in a n a c t iv e m a r k et . T h e def init io n o f a c t iv e m a r k et h a s a l l o f t h e f o l l o w ing c o ndit io ns : ( 1 ) t h e pr o du c t s t r a ded in t h e m a r k et a r e h o m o g eneo u s , ( 2) w il l ing pa r t ies a r e a v a il a b l e a ny t im e in t h e m a r k et , a nd ( 3 ) pr ic e inf o r m a t io n is a v a il a b l e f o r t h e pu b l ic .

( B ) L ev el 2

F a ir v a l u e m ea s u r em ent f o r a f ina nc ia l ins t r u m ent c l a s s if ied in L ev el 2 is det er m ined a s t h e o b s er v a b l e pr ic e o t h er t h a n q u o t ed pr ic e in a n a c t iv e m a r k et , inc l u ding a n o b s er v a b l e inpu t o b t a ined in a n a c t iv e m a r k et , eit h er dir ec t l y ( i. e. , a s pr ic es ) o r indir ec t l y ( i. e. , der iv ed f r o m pr ic es ) . T h e exa m pl es o f o b s er v a b l e pr ic e a r e a s f o l l o w s : A. T h e q u o t ed pr ic e f o r a n ident ic a l f ina nc ia l ins t r u m ent in a n a c t iv e m a r k et

m ea ns t h e f a ir v a l u e f r o m t h e m a r k et t r a ns a c t io n pr ic es f o r a n ident ic a l f ina nc ia l ins t r u m ent . An ident ic a l f ina nc ia l ins t r u m ent s h o u l d b e det er m ined b y it s c h a r a c t er is t ic s a nd t er m s o f t r a ns a c t io n. T h e f a ir v a l u e o f a f ina nc ia l ins t r u m ent h a s t o b e a dj u s t ed a c c o r ding t o t h e o b s er v a b l e m a r k et pr ic e o f t h e ident ic a l f ina nc ia l ins t r u m ent . T h e r ea s o ns f o r a dj u s t m ent s inc l u de t im e l a g o f t h e o c c u r r ing m a r k et t r a ns a c t io n pr ic es f o r a n ident ic a l f ina nc ia l ins t r u m ent ( t h e q u o t ed pr ic es do no t r epr es ent f a ir v a l u e a t t h e m ea s u r em ent da t e) , t h e dif f er enc e in t r a ns a c t io n t er m s f o r


6 7

T h e B a nk a nd it s s u b s idia r ies a do pt I AS 3 9 o r t a k e a ny o b s er v a b l e da t a int o a c c o u nt t o ev a l u a t e t h e pr o b a b il it y o f im pa ir m ent a nd l o s s r a t e o f a l l o w a nc e f o r do u b t f u l a c c o u nt s a s t h e es t im a t es o f P D a nd L G D . I n a ddit io n, m a r k t o m a r k et a s s es s m ent o f a der iv a t iv e ins t r u m ent f r o m O v er t h e C o u nt er ( O T C ) is a ppl ied a s E AD . F o r t h o s e a c c o u nt s h a v e s h o w ed s ig nif ic a nt inc r ea s e in c r edit r is k , w o u l d b e t h e C V A a s s es s m ent ed indiv idu a l l y b y t a k ing int o a c c o u nt o f t h e c h a ng es o f expo s u r es , c o ndit io ns o f c o l l a t er a l s a nd t h e r ec o v er y pr o b a b il it ies .

8 . E xc ept t h e f o l l o w ing l is t ed it em s , t h e b o o k v a l u e is c o ns ider ed t o b e a r ea s o na b l e

b a s is o f es t im a t ed f a ir v a l u e if t h e B a nk a nd it s s u b s idia r ies do no t m ea s u r e a f ina nc ia l ins t r u m ent a t f a ir v a l u e.

December 31, 2015 Financial As s ets Book v al u e Fair v al u e H el d- t o - m a t u r it y f ina nc ia l a s s et s －net $ 1 4 7 , 6 6 7 , 1 0 6 1 5 1 , 6 6 6 , 29 3

December 31,2014 Financial As s ets Book v al u e Fair v al u e H el d- t o - m a t u r it y f ina nc ia l a s s et s －net $ 7 1 , 1 5 4 , 3 27 7 1 , 1 0 8 , 7 8 6 O t h er f ina nc ia l a s s et s - I nv es t m ent in deb t ins t r u m ent s w it h o u t

a c t iv e m a r k et s 1 7 , 6 0 0 , 4 0 9 1 7 , 5 7 8 , 3 3 3

( b ) F a ir v a l u e h ier a r c h y inf o r m a t io n o n f ina nc ia l ins t r u m ent s

1 . T h e def init io n o f f a ir v a l u e h ier a r c h y ( A) L ev el 1

F a ir v a l u e m ea s u r em ent f o r a f ina nc ia l ins t r u m ent c l a s s if ied in L ev el 1 is det er m ined a s t h e q u o t ed pr ic e f o r a n ident ic a l f ina nc ia l ins t r u m ent in a n a c t iv e m a r k et . T h e def init io n o f a c t iv e m a r k et h a s a l l o f t h e f o l l o w ing c o ndit io ns : ( 1 ) t h e pr o du c t s t r a ded in t h e m a r k et a r e h o m o g eneo u s , ( 2) w il l ing pa r t ies a r e a v a il a b l e a ny t im e in t h e m a r k et , a nd ( 3 ) pr ic e inf o r m a t io n is a v a il a b l e f o r t h e pu b l ic .

( B ) L ev el 2

F a ir v a l u e m ea s u r em ent f o r a f ina nc ia l ins t r u m ent c l a s s if ied in L ev el 2 is det er m ined a s t h e o b s er v a b l e pr ic e o t h er t h a n q u o t ed pr ic e in a n a c t iv e m a r k et , inc l u ding a n o b s er v a b l e inpu t o b t a ined in a n a c t iv e m a r k et , eit h er dir ec t l y ( i. e. , a s pr ic es ) o r indir ec t l y ( i. e. , der iv ed f r o m pr ic es ) . T h e exa m pl es o f o b s er v a b l e pr ic e a r e a s f o l l o w s : A. T h e q u o t ed pr ic e f o r a n ident ic a l f ina nc ia l ins t r u m ent in a n a c t iv e m a r k et

m ea ns t h e f a ir v a l u e f r o m t h e m a r k et t r a ns a c t io n pr ic es f o r a n ident ic a l f ina nc ia l ins t r u m ent . An ident ic a l f ina nc ia l ins t r u m ent s h o u l d b e det er m ined b y it s c h a r a c t er is t ic s a nd t er m s o f t r a ns a c t io n. T h e f a ir v a l u e o f a f ina nc ia l ins t r u m ent h a s t o b e a dj u s t ed a c c o r ding t o t h e o b s er v a b l e m a r k et pr ic e o f t h e ident ic a l f ina nc ia l ins t r u m ent . T h e r ea s o ns f o r a dj u s t m ent s inc l u de t im e l a g o f t h e o c c u r r ing m a r k et t r a ns a c t io n pr ic es f o r a n ident ic a l f ina nc ia l ins t r u m ent ( t h e q u o t ed pr ic es do no t r epr es ent f a ir v a l u e a t t h e m ea s u r em ent da t e) , t h e dif f er enc e in t r a ns a c t io n t er m s f o r

68


6 8

f ina nc ia l ins t r u m ent s , t r a ns a c t io n pr ic es inv o l v ing r el a t ed pa r t ies , a nd t h e c o r r el a t io n b et w een t h e o b s er v a b l e t r a ns a c t io n pr ic es o f ident ic a l f ina nc ia l ins t r u m ent s a nd t h e m a r k et pr ic es o f h el d f ina nc ia l ins t r u m ent s .

B . T h e q u o t ed m a r k et pr ic e o f t h e s a m e o r ident ic a l f ina nc ia l ins t r u m ent s in

a n ina c t iv e m a r k et . C . T h e f a ir v a l u e is es t im a t ed o n t h e b a s is o f t h e r es u l t s of a v a l ua t ion t ec hni qu e,

a nd t h e m a r k et inpu t s us ed ( i.e . , int er es t r a t e, y iel d c ur v e, a nd f l uc t ua t io n r a t e) a r e b a s ed o n o b t a ina b l e da t a f r o m t h e m a r k et ( a n o b s er v a b l e inpu t m ea ns a n inpu t c a n b e der iv ed f r o m m a r k et da t a a nd c a n r ef l ec t t h e expec t a t ion of m a r ke t pa r t ic ipa nt s w h en t h e input s w er e us ed in ev a l u a t ing t he pr ic es o f f ina nc ia l ins t r u m ent s ) .

D . A m a j o r it y o f inpu t s a r e der iv ed f r o m o b s er v a b l e m a r k et da t a , o r t h e inpu t

c o r r el a t io n c a n b e t es t ed b a s ed o n o b s er v a b l e m a r k et da t a .

( C ) L ev el 3

I npu t f o r a f a ir v a l u e m ea s u r em ent f o r a f ina nc ia l ins t r u m ent c l a s s if ied in L ev el 3 is no t b a s ed o n o b t a ina b l e da t a f r o m t h e m a r k et ( a n u no b s er v a b l e inpu t , s u c h a s v o l a t il it y f o r a s h a r e o pt io n der iv ed f r o m t h e s h a r e’ s h is t o r ic a l pr ic es , a s it do es no t g ener a l l y r epr es ent c u r r ent m a r k et expec t a t io ns a b o u t f u t u r e v o l a t il it y ) .

69


6 9

2. F a ir v a l u e h ier a r c h y inf o r m a t io n o n f ina nc ia l ins t r u m ent s

December 31, 2015

As s ets and Liabil ities

Total Lev el 1 Lev el 2 Lev el 3 Ins tru ments meas u red at f air v al u e Ins tru ments meas u red at f air v al u e on a recu rring bas is

Non- Deriv ativ e Financial Ins tru ments As s ets and Liabil ities

As s ets : F ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e

t h r o u g h pr o f it o r l o s s

F ina nc ia l a s s et s h el d f o r t r a ding I nv es t m ent in s t o c k s $ 3 0 8 , 4 6 8 3 0 8 , 4 6 8 - - I nv es t m ent in deb t ins t r u m ent s 5 1 , 0 4 9 , 5 6 1 6 6 3 , 3 7 8 5 0 , 3 8 6 , 1 8 3 - O t h er s 3 0 , 9 7 7 3 0 , 9 7 7 - -

D es ig na t ed a s f ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s

I nv es t m ent in deb t ins t r u m ent s 6 , 8 0 2, 0 5 1 - 6 , 8 0 2, 0 0 8 4 3 O t h er s 1 , 3 0 5 , 5 5 4 - - 1 , 3 0 5 , 5 5 4

Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net I nv es t m ent in s t o c k s 3 , 8 9 5 , 4 7 9 3 , 8 9 5 , 4 7 9 - - I nv es t m ent in deb t ins t r u m ent s 4 4 4 , 0 1 4 , 7 7 3 1 0 9 , 6 4 7 , 21 3 3 3 3 , 9 3 2, 7 6 3 4 3 4 , 7 9 7O t h er s 7 , 7 9 8 , 0 4 8 2, 5 25 , 8 26 5 , 27 2, 222 -

Liabil ities : D es ig na t ed a s f ina nc ia l l ia b il it ies

m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f i t o r l o s s

3 8 , 6 8 3 , 3 5 5 - - 3 8 , 6 8 3 , 3 5 5

Deriv ativ e Financial Ins tru ments As s ets and Liabil ities


t h r o u g h pr o f it o r l o s s $ 8 1 , 1 0 5 , 5 1 2 27 , 6 5 7 6 0 , 9 6 4 , 9 7 4 20 , 1 1 2, 8 8 1

D er iv a t i v e f ina nc ia l a s s et s － h edg ing 1 0 7 , 5 26 - 1 0 7 , 5 26 - Liabil ities :

F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f i t o r l o s s

8 8 , 9 0 9 , 223 4 5 , 1 5 6 6 8 , 0 7 8 , 5 7 5 20 , 7 8 5 , 4 9 2

D er iv a t i v e f ina nc ia l l ia b il it ies － h edg ing 4 4 1 , 4 28 - 4 4 1 , 4 28 - Ins tru ments not meas u red at f air v al u e

H el d- t o - m a t u r it y f ina nc ia l a s s et s －net 1 5 1 , 6 6 6 , 29 3 1 24 , 7 3 5 , 6 0 3 26 , 9 3 0 , 6 9 0 -

O t h er f ina nc ia l a s s et s - I nv es t m ent in deb t ins t r u m ent s w it h o u t a c t i v e m a r k et s

1 4 , 1 9 8 , 7 5 2 - - 1 4 , 1 9 8 , 7 5 2

70


7 0

December 31, 2014

As s ets and Liabil ities

Total Lev el 1 Lev el 2 Lev el 3 Ins tru ments meas u red at f air v al u e Ins tru ments meas u red at f air v al u e on a recu rring bas is

Non- Deriv ativ e Financial Ins tru ments As s ets and Liabil ities



F ina nc ia l a s s et s h el d f o r t r a ding I nv es t m ent in s t o c k s $ 1 5 7 , 3 1 1 1 5 7 , 3 1 1 - - I nv es t m ent in deb t ins t r u m ent s 3 8 , 4 9 2, 9 8 8 2, 6 5 8 , 9 4 4 3 5 , 8 3 4 , 0 4 4 - O t h er s 28 3 , 21 3 28 3 , 21 3 - -


I nv es t m ent in s t o c k s 2, 8 4 2, 0 5 8 - 2, 8 4 2, 0 5 8 - I nv es t m ent in deb t ins t r u m ent s 6 , 6 3 9 , 7 22 - 6 , 6 3 9 , 6 8 1 4 1 O t h er s 2, 27 5 , 24 2 - - 2, 27 5 , 24 2

Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net I nv es t m ent in s t o c k s 2, 3 6 2, 3 6 2 2, 3 6 2, 3 6 2 - - I nv es t m ent in deb t ins t r u m ent s 5 4 0 , 7 6 9 , 1 6 9 1 7 5 , 9 0 7 , 7 5 0 3 6 4 , 0 1 8 , 7 9 8 8 4 2, 6 21 O t h er s 6 , 1 6 4 , 1 0 5 1 , 7 1 1 , 9 6 3 4 , 4 5 2, 1 4 2 -

Liabil ities : D es ig na t ed a s f ina nc ia l l ia b il it ies

m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s

3 0 , 26 0 , 23 9 - - 3 0 , 26 0 , 23 9



t h r o u g h pr o f it o r l o s s $ 5 7 , 7 0 9 , 7 20 5 7 , 8 4 2 4 5 , 5 5 0 , 4 3 8 1 2, 1 0 1 , 4 4 0

D er iv a t i v e f ina nc ia l a s s et s － h edg ing 1 , 4 9 9 , 4 8 6 - 1 , 3 4 7 , 5 5 3 1 5 1 , 9 3 3 Liabil ities :

F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f i t o r l o s s

6 2, 5 5 6 , 0 0 8 4 6 , 0 20 5 0 , 4 0 9 , 7 3 1 1 2, 1 0 0 , 25 7

D er iv a t i v e f ina nc ia l l ia b il it ies － h edg ing 9 1 6 , 3 22 - 9 1 6 , 3 22 -

3 . N o ins t r u m ent m ea s u r ed a t f a ir v a l u e h a s b een t r a ns f er r ed b et w een l ev el 1 a nd l ev el

2 b y t h e B a nk a nd it s s u b s idia r ies f o r t h e y ea r ended o n D ec em b er 3 1 , 20 1 5 .

71


7 1

4 . S t a t em ent s o f c h a ng es in f ina nc ia l a s s et s w h ic h w er e c l a s s if ied t o L ev el 3 b a s ed o n f a ir v a l u e m ea s u r em ent


Cu rrent increas e Cu rrent decreas e

Items

Beginning

bal ance

The

amou nt

recogniz ed in

cu rrent net

income

The amou nt

recogniz ed in

other

comp rehens iv e

Income

P u rchas e

or is s u e

Trans f er in of

Lev el

3 and ou t of other

l ev el s

Trans f er in of

Lev el 3 of

f inancia l as s ets

and ou t of Lev el

3 of f inancial

l iabil ities

Sal e, dis p os al ,

or

s ettl ement

Trans f er in of

other l ev el s

and ou t of Lev el 3

Trans f er in of

Lev el 3 of

f inancia l

l iabil ities and

ou t of Lev el 3

of f inancial

as s ets

Ending

bal ance

F ina nc ia l a s s et s m ea s u r ed a t f a ir


F ina nc ia l a s s et s h el d f o r

t r a ding

$ 1 2 , 1 0 1 , 4 4 0 20 , 9 20 , 9 3 5 - 1 , 29 1 , 0 26 - 4 3 0 , 4 6 2 1 3 , 0 4 6 , 1 5 5 1 , 5 8 4 , 8 27 - 20 , 1 1 2, 8 8 1

D es ig na t ed a s f ina nc ia l a s s et s

m ea s u r ed a t f a ir v a l u e


2, 27 5 , 28 3 1 0 7 , 4 4 3 - - - - 1 , 0 7 7 , 1 29 - - 1 , 3 0 5 , 5 9 7

Av a il a b l e- f o r - s a l e f ina nc ia l

a s s et s －net

8 4 2, 6 21 ( 4 0 , 5 4 3 ) 1 1 , 0 0 7 - - - 3 7 8 , 28 8 - - 4 3 4 , 7 9 7

D er iv a t iv e f ina nc ia l a s s et s －

h edg ing

1 5 1 , 9 3 3 ( 1 5 1 , 9 3 3 ) - - - - - - - -

T o t a l $ 15,371,277 20,835,902 11,007 1,291,026 - 430,462 14,501,572 1,584,827 - 21,853,275

T h e po l ic y f o r w h en t o r ec o g niz e t h e t r a ns f er s in o r o u t o f L ev el 3 is a c c o r ding t o t h e a c t u a l da t e o f t h e ev ent o r c h a ng e in c ir c u m s t a nc es . I n t h e c u r r ent y ea r , t h e t r a ns f er o f f ina nc ia l a s s et s f r o m L ev el 3 t o L ev el 2 w a s du e t o a s w it c h o f v a l u a t io n a ppr o a c h .



Items

Beginning

bal ance

The

amou nt

recogniz ed in

cu rrent net

income

The amou nt

recogniz ed in

other

comp rehens iv e

Income

P u rchas e

or is s u e

Trans f er in of

Lev el

3 and ou t of other

l ev el s

Trans f er in of

Lev el 3 of

f inancia l as s ets

and ou t of Lev el

3 of f inancial

l iabil ities


or

s ettl ement

Trans f er in of

other l ev el s


Trans f er in of

Lev el 3 of

f inancia l

l iabil ities and

ou t of Lev el 3

of f inancial

as s ets

Ending

bal ance

F ina nc ia l a s s et s m ea s u r ed a t f a ir


F ina nc ia l a s s et s h el d f o r

t r a ding

$ 2 , 6 8 4 , 5 4 4 1 2, 4 7 7 , 6 5 2 - 1 , 7 9 6 , 9 27 1 , 1 4 8 , 4 8 0 6 7 , 1 28 4 , 7 6 5 , 9 26 1 , 3 0 7 , 3 6 5 - 1 2, 1 0 1 , 4 4 0

D es ig na t ed a s f ina nc ia l a s s et s



- 1 20 , 1 4 5 - 2, 1 5 5 , 1 3 8 - - - - - 2, 27 5 , 28 3

Av a il a b l e- f o r - s a l e f ina nc ia l

a s s et s －net

5 0 4 , 1 6 1 25 , 9 8 3 4 1 , 9 6 9 5 7 5 , 6 1 3 - - 3 0 5 , 1 0 5 - - 8 4 2, 6 21

D er iv a t iv e f ina nc ia l a s s et s －

h edg ing

8 1 8 , 7 8 7 ( 6 6 6 , 8 5 4 ) - - - - - - - 1 5 1 , 9 3 3

T o t a l $ 4,007,492 11,956,926 41,969 4,527,678 1,148,480 67,128 5,071,031 1,307,365 - 15,371,277

N o t e F o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , t h e inc r ea s e o f $ 9 23 , 5 24 in des ig na t ed a s f ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s w a s du e t o t h e a c q u is it io n o f T o k y o S t a r B a nk , L t d; t h e inc r ea s e o f $ 6 4 0 , 7 5 2 in a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s - net w a s du e t o t h e a c q u is it io n o f T o k y o S t a r B a nk , L t d.

72


7 2

5 . S t a t em ent s o f c h a ng es in f ina nc ia l l ia b il it ies w h ic h w er e c l a s s if ied t o L ev el 3 b a s ed

o n f a ir v a l u e m ea s u r em ent



Items

Beginning

bal ance

The

amou nt

recogniz ed in

cu rrent net

income

The amou nt

recogniz ed in

other

comp rehens iv e

Income

P u rchas e

or is s u e

Trans f er in of

Lev el

3 and ou t of other

l ev el s

Trans f er in of

Lev el 3 of

f inancia l

l iabil ities and

ou t of Lev el 3

of f inancial as s ets


or

s ettl ement

Trans f er in of

other l ev el s


Trans f er in of

Lev el 3 of

f inancia l

as s ets and

ou t of Lev el 3

of f inancial

l iabil ities

Ending

bal ance

F ina nc ia l l ia b il it ies




h el d f o r t r a ding

$ 1 2 , 1 0 0 , 25 7 1 9 , 6 4 2, 0 7 0 - 2, 5 6 4 , 3 1 2 - 4 3 0 , 4 6 2 1 2, 3 6 6 , 7 8 2 1 , 5 8 4 , 8 27 - 20 , 7 8 5 , 4 9 2


des ig na t ed a t f a ir

v a l u e t h r o u g h


3 0 , 26 0 , 23 9

( 3 , 20 9 , 5 3 5 )

1 , 1 5 0 , 7 29

1 0 , 4 8 1 , 9 22

-

-

-

-

-

3 8 , 6 8 3 , 3 5 5

T o t a l $ 42,360,496 16,432,535 1,150,729 13,046,234 - 430,462 12,366,782 1,584,827 - 59,468,847

T h e po l ic y f o r w h en t o r ec o g niz e t h e t r a ns f er s in o r o u t o f L ev el 3 is a c c o r ding t o t h e a c t u a l da t e o f t h e ev ent o r c h a ng e in c ir c u m s t a nc es . I n t h e c u r r ent y ea r , t h e t r a ns f er o f f ina nc ia l l ia b il it ies f r o m L ev el 3 t o L ev el 2 w a s du e t o a s w it c h o f v a l u a t io n a ppr o a c h .



Items

Beginning

bal ance

The

amou nt

recogniz ed in

cu rrent net

income

The amou nt

recogniz ed in

other

comp rehens iv e

Income

P u rchas e

or is s u e

Trans f er in of

Lev el

3 and ou t of other

l ev el s

Trans f er in of

Lev el 3 of

f inancia l

l iabil ities and

ou t of Lev el 3

of f inancial as s ets


or

s ettl ement

Trans f er in of

other l ev el s


Trans f er in of

Lev el 3 of

f inancia l

as s ets and

ou t of Lev el 3

of f inancial

l iabil ities

Ending

bal ance





h el d f o r t r a ding

$ 2, 6 0 1 , 5 0 3 1 1 , 1 3 2, 25 4 - 3 , 1 22, 9 5 4 3 8 7 , 4 0 1 6 7 , 1 28 4 , 7 5 8 , 4 1 5 4 5 2, 5 6 8 - 1 2, 1 0 0 , 25 7


des ig na t ed a t f a ir

v a l u e t h r o u g h


- ( 2, 0 4 0 , 4 4 3 ) ( 4 6 4 , 0 1 2) 3 2, 7 6 4 , 6 9 4 - - - - - 3 0 , 26 0 , 23 9

T o t a l $ 2,601,503 9,091,811 (464,012) 35,887,648 387,401 67,128 4,758,415 452,568 - 42,360,496

6 . S ens it iv it y a na l y s is o f L ev el 3 f a ir v a l u e if r ea s o na b l y po s s ib l e a l t er na t iv e

a s s u m pt io ns u s ed V a l u a t io n t ec h niq u es u s ed b y t h e B a nk a nd it s s u b s idia r ies f o r f a ir v a l u e m ea s u r em ent s o f f ina nc ia l ins t r u m ent s a r e a ppr o pr ia t e. H o w ev er , t h e u s e o f dif f er ent v a l u a t io n m o del s o r inpu t s c o u l d l ea d t o dif f er ent o u t c o m es o f f a ir v a l u e m ea s u r em ent s . T h e f o l l o w ing s t a t em ent a na l y s es L ev el 3 s ens it iv it ies f o r t h o s e u no b s er v a b l e inpu t s in v a l u a t io n m o del s t h a t h a v e a m a t er ia l im pa c t o n t h e v a l u a t io n o f L ev el 3 f ina nc ia l ins t r u m ent . T h e B a nk a nd it s s u b s idia r ies ’ m a j o r L ev el 3 f ina nc ia l ins t r u m ent s inc l u de:

73


7 3

A. B a c k - t o - b a c k der iv a t iv e t r a ns a c t io ns : t h e m o v em ent s o f f a ir v a l u e b et w een f ina nc ia l a s s et s a nd l ia b il it ies c a n b e f u l l y o f f s et f o r b a c k - t o - b a c k t r a des , s o t h er e is no m a t er ia l im pa c t o n t h e inc o m e s t a t em ent .

B . F ina nc ia l D eb ent u r es is s u ed b y t h e B a nk : t h e s ens it iv it y a na l y s is b a s ed o n t h e

a s s u m pt io n o f o ne b a s is po int c h a ng e in t h e B a nk ’ s c r edit s pr ea d w o u l d h a v e t h e f o l l o w ing ef f ec t s o n t h e s t a t em ent o f o t h er c o m pr eh ens iv e inc o m e.

Imp acts on the s tatement of other comp rehens iv e income as f air v al u e changes

Fav orabl e changes

Unf av orabl e changes

December 31, 2015 Liabil ities F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r

l o s s

D es ig na t ed a s f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s

$ 60,988

(60,734)

December 31, 2014 Liabil ities F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r

l o s s


$ 42,456

(42,122)

7 . Q u a nt it a t iv e inf o r m a t io n a b o u t t h e s ig nif ic a nt u no b s er v a b l e inpu t s in L ev el 3 Q u a nt it a t iv e inf o r m a t io n a b o u t t h e s ig nif ic a nt u no b s er v a b l e inpu t s w a s a s f o l l o w s :

December 31, 2015

Fair v al u e

V al u ation

techniq u e

Key u nobs erv abl e

inp u ts

Range of

inp u ts

The rel ation betw een inp u ts

and f air v al u e

Recu rring f air v al u e meas u rements Non- Deriv ativ e Financial Ins tru ments As s ets and

Liabil ities

As s ets : F ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it

o r l o s s


$ 1 , 3 0 5 , 5 9 7 D is c o u nt ed c a s h f l o w m o del

L o s s r a t e 0 . 1 1 % ~ 7 . 0 0 % T h e h ig h er l o s s r a t e, t h e l o w er f a ir v a l u e

Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net

I nv es t m ent in deb t ins t r u m ent s 4 3 4 , 7 9 7 D is c o u nt ed c a s h f l o w m o del

I nt er es t r a t e 1 . 0 0 % ~ 2. 0 0 % T h e l o w er int er es t r a t e, t h e h ig h er f a ir v a l u e

Liabil ities :


3 8 , 6 8 3 , 3 5 5 I nt er es t r a t e o pt io n pr ic ing m o del

C r edit s pr ea d 1 . 0 3 % ~ 1 . 5 9 % T h e h ig h er c r edit s pr ea d, t h e l o w er f a ir v a l u e


As s ets : F ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it

o r l o s s

20 , 1 1 2, 8 8 1 I nt er es t r a t e o pt io n

pr ic ing m o del

I nt er es t r a t e

c o r r el a t io n

7 1 % ~ 8 2% T h e h ig h er c o r r e l a t io n, t h e l o w er

f a ir v a l u e Liabil ities :

F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h


20 , 7 8 5 , 4 9 2 I nt er es t r a t e o pt io n

pr ic ing m o del

I nt er es t r a t e

c o r r el a t io n

7 1 % ~ 8 2% T h e h ig h er c o r r e l a t io n, t h e h ig h er

f a ir v a l u e

74


7 4

8 . T h e v a l u a t io n pr o c es s t o l ev el 3 f ina nc ia l ins t r u m ent s M a r k et r is k m a na g em ent u nit is r es po ns ib l e f o r independent m o del v a l ida t io n, w it h u s ing a nd c o nf ir m ing t h e r el ia b l e f o r independent m a r k et da t a , c a l ib r a t ing v a l u a t io n m o del o n a r eg u l a r b a s is , exec u t ing b a c k t es t ing , a s w el l a s a ppl y ing a ny f a ir v a l u e a dj u s t m ent s if nec es s a r y t o ens u r e t h e v a l u a t io n r es u l t s a r e r ea s o na b l e.

( c ) F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , u nr ea l iz ed g a ins du e t o t h e es t im a t ed

c h a ng e o f f a ir v a l u e r ec o g niz ed b y t h e B a nk a nd it s s u b s idia r ies w er e $ 4 4 9 , 8 7 2 a nd $ 5 , 4 5 6 , 6 25 , r es pec t iv el y .

( d) F ina nc ia l r is k inf o r m a t io n

T h e m a j o r o b j ec t iv e o f t h e r is k m a na g em ent o f t h e B a nk a nd it s s u b s idia r ies is t o c o nt r o l t h e r is k u nder t h e s c o pe a ppr o v ed b y t h e b o a r d o f dir ec t o r s b y u s ing ef f ec t iv e m a na g em ent m et h o ds t o u t il iz e r es o u r c e a nd c r ea t e m a xim u m ec o no m ic pr o f it . F o r m a j o r r is k s , t h e B a nk a nd it s s u b s idia r ies h a v e es t a b l is h ed t h e r is k m a na g em ent po l ic ies t o s er v e a s it s pr im a r y pr inc ipl e, w h ic h c o v er s m a na g er ia l o b j ec t iv e, o r g a niz a t io na l s t r u c t u r e, a c c o u nt a b il it y , a nd r is k m a na g em ent pr o c edu r es , a nd b y im pl em ent ing t h es e m ec h a nis m s , o per a t io na l r is k s c a n b e c o nt r o l l ed a t a n a c c ept a b l e l ev el . T h e o r g a niz a t io n s t r u c t u r e o f r is k m a na g em ent inc l u des B o a r d o f D ir ec t o r s , G ener a l Au dit o r , R is k M a na g em ent C o m m it t ee, S enio r M a na g em ent a nd G l o b a l R is k M a na g em ent G r o u p. T h e s c o pe o f t h eir a u t h o r it ies il l u s t r a t es a s f o l l o w : B o a r d o f D ir ec t o r s , w h o is in c h a r g e o f r is k s t r a t eg y a ppr o v a l , r is k po l ic ies , r is k m a na g em ent f r a m ew o r k s , a nd c r ea t ing a c u l t u r e o f r is k m a na g em ent , s er v es a s t h e pr im a r y g u ida nc e f o r a l l r is k s a nd u nder t a k es u l t im a t e r es po ns ib il it y o f o v er a l l r is k m a na g em ent . G ener a l Au dit o r is r es po ns ib l e f o r pl a nning a nd c a r r y ing o u t a l l k ind o f a u dit b u s ines s a nd is dir ec t l y a c c o u nt a b l e t o t h e B o a r d. T h e int er na l a u dit ing u nit u nder t h e G ener a l Au dit o r m u s t r eg u l a r l y r ev iew a nd a s s es s t h e int eg r it y a nd a c t u a l im pl em ent a t io n o n v a r io u s k inds o f r is k m a na g em ent m ec h a nis m , a nd t im el y pr o v ide s u g g es t io ns f o r im pr o v em ent s o t h a t t h e r is k m a na g em ent m ec h a nis m c a n b e r u n c o nt inu a l l y ef f ec t iv el y . R is k M a na g em ent C o m m it t ee a s s is t s t h e B o a r d in r is k g o v er na nc e, b y c o m m u nic a t ing , r epo r t ing , a nd r ec o m m enda t io ns ; R is k M a na g em ent C o m m it t ee a l s o b u il ds a ppr o pr ia t e r is k a u t h o r iz a t io n a nd w il l m o nit o r a nd ens u r e r is k a u t h o r iz a t io n o per a t es pr o per l y . W e expec t t h e s enio r m a na g er s t o s u ppo r t t h e B a nk ’ s c u l t u r e o f r is k m a na g em ent , t h r o u g h dec is io n- m a k ing pr o c es s es a nd l ea der ’ s s u ppo r t iv e b eh a v io r , a nd t h u s inf l u enc e a l l em pl o y ees a nd o r g a niz a t io n. S enio r M a na g em ent is r es po ns ib l e f o r s u per v is ing a nd ens u r ing r is k a u t h o r iz a t io n s y s t em o per a t es pr o per l y in a c c o r da nc e w it h t h e dir ec t io n o f t h e b o a r d a ppr o v ed. G l o b a l R is k M a na g em ent G r o u p is r es po ns ib l e f o r pl a nning a nd m a na g ing t h e B a nk ’ s r is k pr o f il es w h ic h inc l u de c r edit , m a r k et , o per a t io ns , int er es t a nd l iq u idit y r is k s o f t h e b a nk ing b o o k , a nd dev el o ping pr o per po l ic ies a nd s t r a t eg ies r el a t ing t o r is k ident if ic a t io n, m ea s u r em ent , c o nt r o l , a nd m a na g em ent .

75


7 5

1 . M a r k et R is k M a na g em ent

D ef init io n a nd s o u r c es o f m a r k et r is k m a na g em ent M a r k et r is k is t h e r is k t h a t t h e B a nk a nd it s s u b s idia r ies ’ ea r ning s o r c a pit a l o r it s a b il it y t o m eet b u s ines s o b j ec t iv es w il l b e a dv er s el y a f f ec t ed b y c h a ng es in t h e l ev el , v o l a t il it y o r c o r r el a t io n o f m a r k et r is k f a c t o r s , s u c h a s int er es t r a t e ( inc l u ding c r edit s pr ea d) , f o r eig n exc h a ng e r a t e, s ec u r it ies pr ic e a nd c o m m o dit y pr ic e. T h e m a r k et c o r r el a t io n a nd l iq u idit y o f t h es e t y pes o f ins t r u m ent s a r e a l s o c o v er ed. T h e m a r k et r is k o f t h e B a nk a nd it s s u b s idia r ies a r is es f r o m eit h er t r a ding o r no n- t r a ding po r t f o l io s . T h e t r a ding po r t f o l io inc l u des po s it io ns a r is ing f r o m t r a ding a c t iv it ies , w h ic h a im a t b enef it ing f r o m s h o r t - t er m pr ic e m o v em ent s , s u c h a s pr o pr iet a r y t r a ding a nd m a r k et m a k ing . T h e no n- t r a ding po r t f o l io inc l u des po s it io ns no t h el d f o r t h e pu r po s e o f ea r ning c a pit a l g a ins . T h e m a r k et r is k m a na g em ent f r a m ew o r k f o r t r a ding a nd no n- t r a ding po r t f o l io s is des c r ib ed a s f o l l o w s : A. T r a ding P o r t f o l io s M a na g em ent

a . O b j ec t iv e

T h e M a r k et R is k M a na g em ent P o l ic y is t h e c o r ner s t o ne o f m a na g ing m a r k et r is k - t a k ing a c t iv it ies in t h e B a nk a nd it s s u b s idia r ies . T h e P o l ic y is dev el o ped t o es t a b l is h def init e m a r k et r is k m a na g em ent m ec h a nis m s o f f ina nc ia l t r a ns a c t io n, t o f a c il it a t e m a r k et r is k c o m m u nic a t io n w it h in t h e B a nk a nd it s s u b s idia r ies , a nd t o pr o v ide pr o per m a na g em ent .

b . M a r k et R is k M a na g em ent P r o c edu r e a nd M ea s u r em ent ( A) M a na g em ent P r o c edu r es

( a ) R is k ident if ic a t io n R is k - t a k ing u nit s h a l l ident if y t h e m a r k et r is k o f f ina nc ia l ins t r u m ent s , a nd t h is s h o u l d b e c l ea r l y s t a t ed in t h e r el ev a nt pr o du c t pr o g r a m do c u m ent a t io n. M a r k et r is k m a na g em ent u nit ( M R M U ) exec u t es t h e ident if ic a t io n o f m a r k et r is k independent l y .

( b ) R is k m ea s u r em ent M R M U s h a l l def ine a ppr o pr ia t e a nd c o ns is t ent m a r k et r is k m ea s u r em ent m et h o do l o g ies in l ine w it h t h e b u s ines s c h a r a c t er is t ic s a nd r is k s o u r c e t o pr o per l y ev a l u a t e t h e pr im a r y m a r k et r is k expo s u r e. T h e r is k m ea s u r em ent s h a l l b e a ppl ied t o da il y m a na g em ent a nd s h a l l s er v e a s a f o u nda t io n f o r m a r k et r is k pl a nning , m o nit o r ing , a nd c o nt r o l l ing .

76


7 6

V a l u a t io n a ppr o a c h a nd m a r k et da t a a do pt io n f o r c a l c u l a t ing P / L , r is k s ens it iv it ies , V a l u e a t R is k ( V a R ) , s t r es s t es t ing s h o u l d b e a ppr o v ed b y M R M U .

( c ) R is k c o nt r o l l ing

M a r k et r is k l im it is a t o o l f o r a u t h o r iz ing a nd c o nt r o l l ing s pec if ic f o r m s o f m a r k et r is k a r is ing f r o m t h e t r a ding a c t iv it ies o f t h e B a nk a nd it s s u b s idia r ies t o ens u r e t h a t t h e B a nk a nd it s s u b s idia r ies a r e no t expo s ed t o m a r k et r is k b ey o nd t h e r is k a ppet it e. M a r k et r is k l im it m a na g em ent pr o c edu r es , s u c h a s t h e es t a b l is h m ent , a ppr o v a l , exc ept io n m a na g em ent , l im it exc es s t r ea t m ent , et c . , s h a l l c o m pl y w it h t h e r el ev a nt m a r k et r is k m a na g em ent do c u m ent s .

( d) R is k r epo r t ing M a r k et r is k r epo r t ing is a n ef f ec t iv e r is k c o m m u nic a t io n t o o l . M R M U s h a l l s u b m it m a r k et r is k m a na g em ent r epo r t s t o s enio r m a na g er s o n a da il y b a s is a nd per io dic a l l y r epo r t t h e int eg r a t ed m a r k et r is k pr o f il e t o s enio r exec u t iv es a nd t h e B o a r d t o ev a l u a t e r is k c o nc ent r a t io n a nd c a pa c it y o f t h e B a nk a nd it s s u b s idia r ies a nd t o f o r m nec es s a r y r is k a dj u s t ing s t r a t eg ies .

( B ) R is k M ea s u r em ent Appr o a c h es ( a ) V a l u e a t R is k , V a R

T h e V a R m o del is dev el o ped a s a q u a nt it a t iv e t ec h niq u e f o r int er na l r is k m a na g em ent pu r po s e, a nd w il l b e c o nt inu a l l y r ef ined t o m eet t h e q u a nt it a t iv e a nd q u a l it a t iv e s t a nda r ds o f I M A ( I nt er na l M o del Appr o a c h ) r eq u ir em ent s .

( b ) S t r es s T es t ing

S t r es s t es t ing is u s ed t o c a l c u l a t e a r a ng e o f t r a ding expo s u r es w h ic h r es u l t f r o m ext r em e m a r k et ev ent s o r s c ena r io s . S t r es s t es t ing m ea s u r es t h e im pa c t o f exc ept io na l c h a ng es in m a r k et r a t e/ pr ic e, v o l a t il it y o r c o r r el a t io n in t h e f a ir v a l u e o f t r a ding po r t f o l io s a s a s u ppl em ent t o V a R w h ic h is u na b l e t o c a pt u r e t h e t a il r is k .

( c ) F a c t o r S ens it iv it y F a c t o r s ens it iv it y is a m ea s u r em ent f o r m o nit o r ing t h e c r o s s - pr o du c t expo s u r es w it h in ea c h r is k t y pe, inc l u ding b u t no t l im it ed t o f o r eig n exc h a ng e, int er es t r a t e, eq u it y , c o m m o dit y , a nd c r edit .

77


7 7

c . M a r k et R is k M it ig a t io n a nd H edg ing T h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s inc l u de s po t s a nd der iv a t iv es . T h e der iv a t iv es a r e em pl o y ed t o r edu c e s po t s expo s u r e o r c o m b ined w it h o t h er der iv a t iv es t o f o r m t r a ding s t r a t eg y . M R M U ev a l u a t es a nd c o nt r o l s t h e m it ig a t io n ef f ec t iv enes s b et w een t r a ding po s it io ns a nd it s ’ h edg e po s it io ns b y u s ing r is k m ea s u r em ent t o o l s , s u c h a s V a R , r is k s ens it iv it ies , et c .

d. I nt er es t R a t e R is k M a na g em ent ( A) D ef init io n

I nt er es t r a t e r is k a r is es f r o m a dv er s e c h a ng es in int er es t r a t es . P r im a r y int er es t r a t e r el a t ed ins t r u m ent s h el d in t h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s inc l u de b o nds a nd int er es t r a t e der iv a t iv es , s u c h a s int er es t r a t e s w a ps , c a ps / f l o o r s , a nd s w a pt io ns .

( B ) M a na g em ent P r o c edu r e I n o r der t o ef f ec t iv el y c o nt r o l t h e int er es t r a t e r is k in t h e t r a ding po r t f o l io s , t h e B a nk a nd it s s u b s idia r ies c o nt r o l int er es t r a t e r is k b y s et t ing l im it s in dif f er ent y iel d c u r v es a nd c u r r enc ies depending o n it s o w n b u s ines s dev el o pm ent a nd m a na g em ent needs .

( C ) M ea s u r em ent Appr o a c h

P V B P , t h e c h a ng e in f a ir v a l u e a s t h e y iel d c u r v e pa r a l l el s h if t s u p b y 0 . 0 1 % ( 1 b p) , is u s ed t o m ea s u r e int er es t r a t e r is k expo s u r es o f t h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s .

U nit I n T h o u s a nds o f N ew T a iw a n D o l l a r s

Cu rrency December 31, 2015 December 31, 2014 Y iel d cu rv e p aral l el s hif t of + 0.01% C N Y $ ( 1 28 ) 1 9 2 E U R 28 8 8 H K D ( 8 24 ) ( 1 5 3 ) J P Y ( 3 1 5 ) ( 5 6 ) N T D ( 3 , 4 8 6 ) 9 9 U S D 1 , 6 1 1 ( 4 4 3 ) O t h er s ( 27 4 ) ( 3 9 5 ) e. F o r eig n E xc h a ng e R is k

( A) D ef init io n

F o r eig n exc h a ng e r is k a r is es f r o m a dv er s e c h a ng es in exc h a ng e r a t es . P r im a r y f o r eig n exc h a ng e ins t r u m ent s h el d in t h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s inc l u de s po t s , f o r w a r ds , a nd c u r r enc y o pt io ns .

78


7 8

( B ) M a na g em ent P r o c edu r e I n o r der t o ef f ec t iv el y c o nt r o l t h e f o r eig n exc h a ng e r is k f o r t h e t r a ding po r t f o l io s , t h e B a nk a nd it s s u b s idia r ies c o nt r o l f o r eig n exc h a ng e r is k b y s et t ing l im it s in dif f er ent c u r r enc ies o r c u r r enc y pa ir s depending o n it s o w n b u s ines s dev el o pm ent a nd m a na g em ent needs .

( C ) M ea s u r em ent Appr o a c h F X D el t a , t h e c h a ng e in net pr es ent v a l u e a s t h e f o r eig n exc h a ng e r a t e m o v es u p b y o ne u nit , 1 % , is u s ed t o m ea s u r e f o r eig n exc h a ng e r is k expo s u r e o f t h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s .


Cu rrency December 31, 2015 December 31, 2014 Underl ying cu rrency u p w ard

mov ement by 1%

AU D $ ( 8 9 4 ) ( 9 1 2) C N Y ( 1 3 9 , 9 4 0 ) 4 7 , 3 6 8 E U R 6 , 1 6 7 ( 6 , 0 1 2) G B P 3 3 4 25 6 H K D ( 1 5 , 29 2) ( 2, 7 26 ) J P Y ( 1 , 1 3 6 ) 2, 3 1 8 K R W ( 3 6 0 ) ( 2, 4 3 1 ) U S D 24 0 , 0 3 2 1 , 8 1 2 O t h er s ( 1 8 , 1 9 1 ) 2, 9 8 5 f . O t h er R is k F a c t o r S ens it iv it ies

( A) E q u it y F a c t o r S ens it iv it y ( E q u it y del t a )

E q u it y D el t a is t h e c h a ng e in f a ir v a l u e a s t h e u nder l y ing s t o c k pr ic e o r index pr ic e m o v es u p b y 1 % . P r im a r y eq u it y ins t r u m ent s h el d in t h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s inc l u de s t o c k s , c o nv er t ib l e b o nds , eq u it y index f u t u r es a nd o pt io ns .

( B ) C o m m o dit y F a c t o r S ens it iv it y ( C o m m o dit y del t a ) C o m m o dit y D el t a is t h e c h a ng e in f a ir v a l u e a s t h e u nder l y ing c o m m o dit y pr ic e m o v es u p b y 1 % . P r im a r y c o m m o dit y ins t r u m ent s h el d in t h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s inc l u de der iv a t iv es in g o l d a nd c r u de o il .

79


7 9

( C ) C r edit S pr ea d F a c t o r S ens it iv it y ( C R 0 1 , C r edit 0 1 ) C R 0 1 is t h e c h a ng e in f a ir v a l u e a s t h e c r edit s pr ea d s h if t u p b y 0 . 0 1 % ( 1 b p) . P r im a r y c r edit - l ink ed ins t r u m ent s h el d in t h e B a nk a nd it s s u b s idia r ies ’ t r a ding po r t f o l io s inc l u de c r edit def a u l t s w a ps .

Eq u ity f actor s ens itiv ity (Eq u ity del ta) Cou ntry/

Commodity December 31,

2015 December 31,

2014 E q u it y F a c t o r S ens it iv it y

S t o c k pr ic e o r index u pw a r d m o v em ent b y 1 % T a iw a n $ 4 5 4 1 1 , 4 0 2 U S A 5 1 0 ( 8 25 ) H o ng K o ng 1 , 1 20 3 , 0 6 4 O t h er s 1 , 5 7 6 2, 8 3 2 C o m m o dit y F a c t o r S ens it iv it y

C o m m o dit y pr ic e u pw a r d m o v em ent b y 1 % G o l d 5 0 8 C o pper - ( 3 0 ) O t h er s - 3 3 5 C r edit S pr ea d F a c t o r S ens it iv it y

C r edit s pr ea d u pw a r d s h if t b y 0 . 0 1 % ( 1 7 0 ) ( 1 6 0 ) B . M a na g em ent M ec h a nis m o f N o n- T r a ding P u r po s e I nv es t m ent P o r t f o l io

a . M a na g em ent o f N o n- T r a ding P u r po s e I nt er es t R a t e R is k

( A) D ef init io n o f N o n- T r a ding P u r po s e I nt er es t R a t e R is k N o n- t r a ding pu r po s e int er es t r a t e r is k o f t h e B a nk a nd it s s u b s idia r ies r ef er t o t h e im pa c t o n t h e pr o f it o r t h e eq u it y o f no n- t r a ding pu r po s e int er es t r a t e s ens it iv e a s s et s a nd l ia b il it ies w h en int er es t r a t e c h a ng es . I nt er es t r a t e r is k m a inl y s t em s f r o m dif f er ent s ens it iv it y o f a s s et s a nd l ia b il it ies t o int er es t r a t e c h a ng e. S u c h r is k c o u l d a r is e f r o m m is m a t c h es o f r epr ic ing t im ing a m o u nt o f a s s et a nd l ia b il it y , v a r y ing m a g nit u de o f c h a ng es in s h o r t - t er m a nd l o ng er - t er m int er es t r a t es , v a r io u s int er es t r a t e indexes t o w h ic h a s s et a nd l ia b il it y a r e l ink ed, o r em b edded o pt io ns .

( B ) M a na g em ent O b j ec t iv e o f N o n- T r a ding P u r po s e I nt er es t R a t e R is k T h e “ As s et a nd L ia b il it y M a na g em ent P o l ic y ” is t h e h ig h es t g u idel ine o f m a na g ing t h e B a nk a nd it s s u b s idia r ies ’ no n- t r a ding pu r po s e int er es t r a t e r is k . T h e P o l ic y def ines t h e a u t h o r it ies , r es po ns ib il it ies a nd m a na g em ent pr o c edu r es . T h r o u g h t h e F u nds T r a ns f er M ec h a nis m ( F T P ) a nd f u nding a c t iv it ies , t h e B a nk a nd it s s u b s idia r ies na v ig a t e t h e a s s et a nd l ia b il it y s t r u c t u r e t o k eep t h e int er es t r is k expo s u r e w it h in t h e r is k a ppet it e, a t t a in a b a l a nc ed r is k pr o f il e a nd m a xim iz e s h a r eh o l der v a l u e.

( C ) M a na g em ent P r o c edu r es a nd R is k M ea s u r em ent o f N o n- T r a ding P u r po s e I nt er es t R a t e R is k .

80


8 0

I n o r der t o ea r n s t a b il iz ed pr o f it s , t h e B a nk a nd it s s u b s idia r ies c o nt r o l t h e int er es t r a t e r is k b y k eeping t h e int er es t r a t e expo s u r es w it h in t h e l im it a ppr o v ed b y t h e B o a r d, c ent r a l iz ing t h e int er es t r a t e r is k f r o m b u s ines s u nit t o s pec if ied u nit t h r o u g h t h e M a t c h - T er m F u nd T r a ns f er M ec h a nis m , a nd a dj u s t ing t h e f u nding po s it io ns pr o a c t iv el y . T h e m ea s u r em ent inc l u des o n b a l a nc e s h eet b a nk ing b o o k int er es t - s ens it iv e a s s et a nd l ia b il it ies , no n- t r a ding pu r po s e f ina nc ia l ins t r u m ent s , a nd int er es t r a t e r el a t ed der iv a t iv es w h ic h a ppl y h edg e a c c o u nt ing . I nt er es t r a t e r is k m o nit o r ing u nit per io dic a l l y c o ndu c t s t h e r is k r epo r t s , w h ic h c o nt a in t h e a na l y s is o f l im it u s a g e, int er es t r a t e r is k s ens it iv it y a nd s t r es s t es t . T h e r is k r epo r t s h a l l per io dic a l l y b e s u b m it t ed t o r el a t ed r is k m a na g em ent m eet ing s .

T h e B a nk a nd it s s u b s idia r ies f r eq u ent l y m ea s u r e int er es t r a t e r is k s b y t h e f o l l o w ing t o o l s : ( a ) R epr ic ing G a p R epo r t T h is r epo r t m ea s u r es t h e r epr ic ing g a p

b et w een a s s et a nd l ia b il it y b y v a r io u s t im e b u c k et s in o r der t o u nder s t a nd int er es t r a t e m is m a t c h .

( b ) I nt er es t R a t e S ens it iv it y

1 . As s et a nd L ia b il it y M is m a t c h : T h is m ea s u r es t h e im pa c t o f 1

b a s is po int c h a ng e in int er es t r a t e o n net int er es t inc o m e ( N I I ) a nd t h a t o n ec o no m ic v a l u e o f eq u it y ( E V E ) . T h e a na l y s is o f s u c h im pa c t o n N I I ( 1 b p△N I I ) f o c u s es o n c h a ng es in int er es t inc o m e a nd expens e w it h in a y ea r ; h enc e, t h is a na l y s is is o f a s h o r t - t er m per s pec t iv e. T h e a na l y s is o f s u c h im pa c t o n E V E ( 1 b p△E V E ) is o f a l o ng - t er m per s pec t iv e a s it f o c u s es o n c h a ng es o f ec o no m ic v a l u e w h ic h w il l b ec o m e net int er es t inc o m e r ec eiv ed ev er y y ea r l a t er o n.

2. N o n- t r a ding pu r po s e f ina nc ia l ins t r u m ent s s pec if ied: U s e t h e

P V B P t o m ea s u r e t h e im pa c t o f 1 b a s is po int c h a ng e in int er es t r a t e o n f a ir v a l u e.

( c ) S t r es s T es t T h is ev a l u a t es t h e im pa c t o f a s ig nif ic a nt c h a ng e in

int er es t r a t e o n E V E . T h e t es t r es u l t s w il l b e c o m pa r ed w it h c a pit a l in o r der t o exa m ine t h e a ppr o pr ia t enes s o f expo s u r e.

( d) ( N o n- t r a ding pu r po s e f ina nc ia l ins t r u m ent s s pec if ied) P r o f it a nd L o s s : T h is ev a l u a t es t h e m a r k et v a l u e o f f ina nc ia l ins t r u m ent ; a im t o k eep t h e im pa c t o n ea r ning s o r eq u it y w it h in t h e B a nk a nd it s s u b s idia r ies r is k a ppet it e.

81


8 1

( D ) R is k M it ig a t io n a nd H edg e o f N o n- T r a ding P u r po s e I nt er es t R a t e R is k T h e B a nk a nd it s s u b s idia r ies s et l im it s t o m a na g e r is k . W h en a n exc es s o f l im it is c o nf ir m ed, r is k m o nit o r ing u nit a na l y z es t h e im pa c t , c o o r dina t es f u nding m a na g em ent u nit a nd o t h er r el a t ed u nit s t o s u b m it t h e a c t io n pl a n t o t h e l im it a u t h o r it y f o r a ppr o v a l , a nd t r a c es t h e ef f ec t iv enes s o f t h e a c t io n pl a n. T h e B a nk a nd it s s u b s idia r ies m a y a dj u s t t h e int er es t r a t e r is k expo s u r e b y a dj u s t ing t h e a s s et a nd l ia b il it y s t r u c t u r es o r ent er ing der iv a t iv e w it h ext er na l c o u nt er pa r t ies . P r io r t o exec u t ing a n ext er na l h edg e, t h e h edg e pl a n w it h s pec if ied h edg ed po s it io n, pr o f it a nd l o s s a na l y s is a nd det a il ed s c h em e s h a l l g a in a ppr o v a l f r o m t h e l im it a u t h o r it y . Af t er a h edg e exec u t ed, r is k m a na g em ent u nit s h a l l per io dic a l l y r ev iew t h e h edg e exec u t io n a nd it s ef f ec t iv enes s , a nd r epo r t t o t h e l im it a u t h o r it y depending o n t h e im pa c t .

b . M a na g em ent o f N o n- T r a ding P u r po s e F o r eig n E xc h a ng e R a t e R is k ( A) D ef init io n a nd S o u r c es o f N o n- T r a ding P u r po s e F o r eig n E xc h a ng e

R a t e R is k

N o n- t r a ding pu r po s e f o r eig n exc h a ng e ( F X ) r a t e r is k o f t h e B a nk a nd it s s u b s idia r ies r ef er t o t h e im pa c t o n t h e pr o f it o r l o s s du e t o f l u c t u a t io n o f F X r a t e o n t h e f o l l o w ing no n- t r a ding pu r po s e F X po s it io ns : ( a ) R ea l iz ed F X g a ins / l o s s es o f a l l no n- t r a ding pu r po s e t r a ns a c t io ns ,

s u c h a s int er es t inc o m e/ expens es o f f o r eig n- c u r r enc y deno m ina t ed l o a ns / depo s it s . U nr ea l iz ed f o r eig n c u r r enc y g a ins a nd l o s s es o f “ a v a il a b l e- f o r - s a l e” po s it io ns a r e no t inc l u ded.

( b ) N o n- t r a ding pu r po s e f o r eig n- c u r r enc y po s it io ns s u c h a s

c u r r ent - per io d f o r eig n- c u r r enc y g a ins / l o s s es o f m o ney m a r k et s w a p.

( B ) M a na g em ent O b j ec t iv e o f N o n- T r a ding P u r po s e F o r eig n E xc h a ng e

R a t e R is k T h e “ As s et a nd L ia b il it y M a na g em ent P o l ic y ” is t h e h ig h es t g u idel ine o f m a na g ing t h e B a nk a nd it s s u b s idia r ies ’ no n- t r a ding pu r po s e F X r is k . T h e P o l ic y def ines t h e a u t h o r it ies , r es po ns ib il it ies a nd m a na g em ent pr o c edu r es , b y w h ic h k eep F X expo s u r es w it h in t h e r is k a ppet it e.

( C ) M a na g em ent P r o c edu r e a nd R is k M ea s u r em ent o f N o n- T r a ding

P u r po s e F o r eig n E xc h a ng e R a t e R is k

82


8 2

T h e B a nk a nd it s s u b s idia r ies ident if y , m ea s u r e, m o nit o r , a nd r epo r t t h e F X r is k t h r o u g h t h e t h o r o u g h r is k m a na g em ent f r a m ew o r k a nd pr o c edu r e. T o c o nt r o l t h e F X r is k , t h e B a nk a nd it s s u b s idia r ies per io dic a l l y m o nit o r t h e r is k expo s u r e a c c o r ding t o t h e a ppr o v ed l im it h ier a r c h y a nd s w eep F X r is k c ent r a l l y f r o m b u s ines s u nit s t o des ig na t ed F X m a na g em ent u nit . F o r o v er s ea s b r a nc h es w it h o u t a s pec if ied F X m a na g em ent u nit , F X po s it io ns w il l b e c ent r a l l y m a na g ed b y t h e F u nding M a na g em ent U nit . T h e r is k f a c t o r w h ic h m ea s u r es no n- t r a ding pu r po s e F o r eig n E xc h a ng e R is k is “ F X D el t a ” , w h ic h m ea s u r es t h e im pa c t o n t h e pr o f it a nd l o s s w h en F X r a t e c h a ng es .

( D ) R is k M it ig a t io n a nd H edg e o f N o n- T r a ding P u r po s e F o r eig n E xc h a ng e

R a t e R is k T h e B a nk a nd it s s u b s idia r ies s et t h e l im it s a nd c o nt r o l m ec h a nis m s t o

m a na g e t h e F X r is k . W h en a n exc es s o f l im it is c o nf ir m ed, b u s ines s u nit w il l expl a in t h e r ea s o n; r is k m o nit o r ing u nit a na l y z es t h e im pa c t , c o o r dina t es b u s ines s u nit t o s u b m it t h e a c t io n pl a n t o t h e l im it a u t h o r it y f o r a ppr o v a l , a nd t r a c es t h e ef f ec t iv enes s o f t h e a c t io n pl a n. P r io r t o exec u t ing a n ext er na l h edg e, t h e h edg e pl a n w it h s pec if ied h edg ed po s it io n, pr o f it a nd l o s s a na l y s is a nd det a il ed s c h em e s h a l l g a in a ppr o v a l f r o m t h e l im it a u t h o r it y . Af t er a h edg e exec u t ed, r is k m a na g em ent u nit s h a l l per io dic a l l y r ev iew t h e h edg e exec u t io n a nd it s ef f ec t iv enes s , a nd r epo r t t o t h e l im it a u t h o r it y depending o n t h e im pa c t .

c . M a na g em ent o f N o n- T r a ding P u r po s e E q u it y R is k ( A) D ef init io n a nd S o u r c es o f N o n- T r a ding P u r po s e E q u it y R is k

N o n- t r a ding pu r po s e eq u it y r is k o f t h e B a nk a nd it s s u b s idia r ies r ef er t o t h e im pa c t o n t h e pr o f it o r l o s s du e t o eq u it y pr ic e f l u c t u a t io n o f no n- t r a ding pu r po s e eq u it y po s it io ns .

( B ) M a na g em ent O b j ec t iv e o f N o n- T r a ding pu r po s e E q u it y R is k T h e “ As s et a nd L ia b il it y M a na g em ent P o l ic y ” is t h e h ig h es t g u idel ine o f m a na g ing t h e B a nk a nd it s s u b s idia r ies ’ no n- t r a ding pu r po s e eq u it y r is k . T h e P o l ic y def ines t h e a u t h o r it ies , r es po ns ib il it ies a nd m a na g em ent pr o c edu r es , b y w h ic h k eep eq u it y expo s u r es w it h in t h e r is k a ppet it e a nd pr ev ent s ev er e im pa c t o n pr o f it o r o w ner eq u it y .

( C ) M a na g em ent P r o c edu r e a nd R is k M ea s u r em ent o f N o n- T r a ding

P u r po s e F o r eig n E xc h a ng e R a t e R is k T h e B a nk a nd it s s u b s idia r ies ident if y , m ea s u r e, m o nit o r , a nd r epo r t t h e eq u it y r is k t h r o u g h t h e t h o r o u g h r is k m a na g em ent f r a m ew o r k a nd pr o c edu r e. T o c o nt r o l t h e eq u it y r is k , t h e B a nk a nd it s s u b s idia r ies

83


8 3

per io dic a l l y m o nit o r t h e r is k expo s u r e a c c o r ding t o t h e a ppr o v ed l im it h ier a r c h y . T h e m a j o r a s pec t s o f E q u it y l im it s inc l u de t h e po s it io n l im it a nd t h e y ea r t o da t e l o s s t r ig g er .

( D ) R is k M it ig a t io n a nd H edg e o f N o n- T r a ding P u r po s e E q u it y R is k

T h e B a nk a nd it s s u b s idia r ies s et t h e l im it s a nd c o nt r o l m ec h a nis m s t o m a na g e t h e eq u it y r is k . W h en a n exc es s o f l im it is c o nf ir m ed, b u s ines s u nit w il l expl a in t h e r ea s o n; r is k m o nit o r ing u nit a na l y z es t h e im pa c t , c o o r dina t es b u s ines s u nit t o s u b m it t h e a c t io n pl a n t o t h e l im it a u t h o r it y f o r a ppr o v a l , a nd t r a c es t h e ef f ec t iv enes s o f t h e a c t io n pl a n.

d. F a c t o r S ens it iv it y Ana l y s is F a c t o r s ens it iv it y a na l y s is b y t h e B a nk a nd it s s u b s idia r ies s u m m a r iz ed a s b el o w :

December 31, 2015 Amou nt Ris k Items Mov ement P rof it and Los s Eq u ity

I nt er es t R a t e R is k I nt er es t r a t e c u r v e s h if t u p 1 b p 1 0 6 , 4 7 3 ( 6 6 , 1 3 5 ) I nt er es t r a t e c u r v e s h if t do w n 1 b p ( 1 0 6 , 4 7 3 ) 6 6 , 1 3 5 F o r eig n E xc h a ng e R a t e

R is k F o r eig n c u r r enc y a ppr ec ia t e 1 % a g a ins t N T D

1 6 4 -

F o r eig n c u r r enc y depr ec ia t e 1 % a g a ins t N T D

( 1 6 4 ) -

E q u it y P r i c e R is k E q u it y pr ic e a ppr ec ia t e 1 % - 1 1 7 , 0 0 8 E q u it y pr ic e depr ec ia t e 1 % - ( 1 1 7 , 0 0 8 )

December 31, 2014 Amou nt Ris k Items Mov ement P rof it and Los s Eq u ity

I nt er es t R a t e R is k I nt er es t r a t e c u r v e s h if t u p 1 b p 7 7 , 0 6 6 ( 5 3 , 3 3 4 ) I nt er es t r a t e c u r v e s h if t do w n 1 b p ( 7 6 , 3 4 7 ) 5 3 , 3 3 4 F o r eig n E xc h a ng e R a t e

R is k F o r eig n c u r r enc y a ppr ec ia t e 1 % a g a ins t N T D

( 7 8 7 ) -

F o r eig n c u r r enc y depr ec ia t e 1 % a g a ins t N T D

7 8 7 -

E q u it y P r i c e R is k E q u it y pr ic e a ppr ec ia t e 1 % 28 , 4 21 1 0 0 , 29 3 E q u it y pr ic e depr ec ia t e 1 % ( 28 , 4 21 ) ( 1 0 0 , 29 3 )

N o t e: W h en a f a ir v a l u e h edg e o r h edg e o f a net inv es t m ent in a f o r eig n

o per a t io n is in c o nf o r m it y w it h a l l t h e c o ndit io ns f o r a ppl y ing h edg e a c c o u nt ing , t h e m ent io ned po s it io ns w il l no t b e c o v er ed b y s u m m a r iz ed det a il s a b o v e. B ec a u s e t h e a f f ec t ed pr o f it o r l o s s is r ec o g niz ed b y o f f s et t ing t h e c h a ng es in t h e f a ir v a l u e o f h edg ing ins t r u m ent s a nd h edg ed it em s .

84


8 4

C . F o r eig n exc h a ng e r a t e g a p inf o r m a t io n Ac c o r ding t o I F R S 7 “ F ina nc ia l I ns t r u m ent s ” pa r a g r a ph N o . 3 4 ( a ) , a n ent it y s h a l l dis c l o s e s u m m a r iz ed q u a nt it a t iv e da t a a b o u t it s expo s u r e t o t h a t r is k a t t h e end o f t h e r epo r t ing per io d. S ig nif ic a nt f o r eig n exc h a ng e r a t e r is k expo s u r e o f t h e B a nk a nd it s s u b s idia r ies w a s a s b el o w :

December 31, 2015 Foreign

cu rrency

Sp ot rate

NTD amou nt Financial as s ets

Monetary items U S D $ 24 , 20 5 , 8 2 8 3 3 . 0 6 6 0 8 0 0 , 3 8 9 , 9 22 J P Y 4 , 4 4 9 , 7 9 2, 7 7 9 0 . 27 4 7 1 , 222, 3 5 8 , 0 7 6 C N Y 25 , 9 6 6 , 3 8 7 5 . 0 9 3 7 1 3 2, 26 4 , 9 8 6 E U R 4 5 4 , 9 8 5 3 6 . 1 4 1 1 1 6 , 4 4 3 , 6 6 1 AU D 6 5 5 , 21 7 24 . 1 6 1 3 1 5 , 8 3 0 , 9 0 4

Non- monetary items U S D 24 , 8 9 7 3 3 . 0 6 6 0 8 23 , 23 9 J P Y 29 , 3 25 , 8 0 1 0 . 27 4 7 8 , 0 5 5 , 7 9 8

Financial l iabil ities Monetary items

U S D $ 24 , 8 21 , 8 0 0 3 3 . 0 6 6 0 8 20 , 7 5 7 , 6 3 3 J P Y 4 , 3 24 , 1 1 7 , 24 2 0 . 27 4 7 1 , 1 8 7 , 8 3 5 , 0 0 6 C N Y 3 0 , 9 8 8 , 1 1 0 5 . 0 9 3 7 1 5 7 , 8 4 4 , 1 3 7 E U R 5 6 0 , 0 3 3 3 6 . 1 4 1 1 20 , 24 0 , 20 1 AU D 6 5 3 , 0 3 6 24 . 1 6 1 3 1 5 , 7 7 8 , 1 9 3

December 31, 2014 Foreign

cu rrency

Sp ot rate

NTD amou nt Financial as s ets

Monetary items U S D $ 1 8 , 5 9 5 , 6 3 2 3 1 . 7 1 8 0 5 8 9 , 8 1 6 , 25 2 C N Y 1 9 , 1 7 7 , 5 5 3 5 . 1 1 5 0 9 8 , 0 9 3 , 1 8 6 J P Y 2, 9 3 7 , 0 9 4 , 3 6 0 0 . 26 5 1 7 7 8 , 6 23 , 7 1 5 AU D 1 5 8 , 1 1 0 25 . 9 6 4 0 4 , 1 0 5 , 1 7 1 C AD 3 5 5 , 7 7 0 27 . 3 1 5 0 9 , 7 1 7 , 8 4 6

Non- monetary items U S D 21 , 6 21 3 1 . 7 1 8 0 6 8 5 , 7 7 4 J P Y 3 4 , 9 6 7 , 3 6 2 0 . 26 5 1 9 , 26 9 , 8 4 7

Financial l iabil ities Monetary items

U S D $ 1 9 , 8 5 2, 1 1 9 3 1 . 7 1 8 0 6 29 , 6 6 9 , 5 0 6 C N Y 26 , 1 1 3 , 5 1 4 5 . 1 1 5 0 1 3 3 , 5 7 0 , 6 27 J P Y 2, 7 1 3 , 4 1 2, 5 0 3 0 . 26 5 1 7 1 9 , 3 25 , 6 5 5 AU D 1 5 5 , 9 9 6 25 . 9 6 4 0 4 , 0 5 0 , 27 8 C AD 3 1 2, 3 0 0 27 . 3 1 5 0 8 , 5 3 0 , 4 7 5

85


8 5

D . D is c l o s u r e it em s r eq u ir ed b y t h e “ R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f

F ina nc ia l R epo r t s b y P u b l ic B a nk s ”

a . I nt er es t r a t e s ens it iv it y inf o r m a t io n ( A) S ens it iv it y a na l y s is o f int er es t r a t e f o r a s s et s a nd l ia b il it ies ( N ew

T a iw a n D o l l a r s )

D ec em b er 3 1 , 20 1 5

U nit I n T h o u s a nds o f N ew T a iw a n D o l l a r s %

Items 1~ 90 days (incl u s iv e)

91~ 180 days (incl u s iv e)

181 days ~ 1 year (incl u s iv e) Ov er 1 year

Total

I nt er es t r a t e s ens it iv e a s s et s

$ 1 , 3 4 8 , 25 5 , 0 26 8 3 , 7 8 1 , 3 5 7 4 5 , 7 5 3 , 0 9 0 1 1 5 , 5 7 3 , 4 6 5 1 , 5 9 3 , 3 6 2, 9 3 8

I nt er es t r a t e s ens it iv e l ia b il it ies

4 6 2, 5 1 4 , 6 7 5 8 5 0 , 5 7 5 , 0 0 0 1 4 4 , 5 1 0 , 0 4 7 6 7 , 6 8 3 , 7 8 0 1 , 5 25 , 28 3 , 5 0 2

I nt er es t r a t e s ens it iv it y g a p

8 8 5 , 7 4 0 , 3 5 1 ( 7 6 6 , 7 9 3 , 6 4 3 ) ( 9 8 , 7 5 6 , 9 5 7 ) 4 7 , 8 8 9 , 6 8 5 6 8 , 0 7 9 , 4 3 6

N et w o r t h 23 3 , 4 1 0 , 9 26R a t io o f int er es t - r a t e- s ens it iv e a s s et s t o l ia b il it ies ( % ) 1 0 4 . 4 6R a t io o f int er es t r a t e s ens it iv it y g a p t o net w o r t h ( % ) 29 . 1 7

D ec em b er 3 1 , 20 1 4


Items




Total


$ 1 , 21 9 , 6 3 6 , 1 3 8 6 8 , 6 3 3 , 0 0 3 4 9 , 5 1 0 , 9 8 9 8 7 , 3 5 8 , 28 7 1 , 4 25 , 1 3 8 , 4 1 7


4 8 5 , 27 0 , 3 9 9 7 3 8 , 9 5 8 , 3 1 7 1 0 5 , 5 22, 6 3 1 4 9 , 23 8 , 9 9 9 1 , 3 7 8 , 9 9 0 , 3 4 6


7 3 4 , 3 6 5 , 7 3 9 ( 6 7 0 , 3 25 , 3 1 4 ) ( 5 6 , 0 1 1 , 6 4 2) 3 8 , 1 1 9 , 28 8 4 6 , 1 4 8 , 0 7 1

N et w o r t h 1 9 9 , 3 29 , 9 1 2R a t io o f int er es t - r a t e- s ens it iv e a s s et s t o l ia b il it ies ( % ) 1 0 3 . 3 5R a t io o f int er es t r a t e s ens it iv it y g a p t o net w o r t h ( % ) 23 . 1 5

N o t e 1 . T h e a f o r em ent io ned a r e t h e B a nk ’ s po s it io n deno m ina t ed in N T D ,

a nd do no t inc l u de c o nt ing ent a s s et o r l ia b il it ies . 2. I nt er es t r a t e s ens it iv e a s s et s a nd l ia b il it ies a r e t h e int er es t - ea r ning

a s s et o r int er es t - b ea r ing l ia b il it ies w h o s e r ev enu e o r c o s t s a r e a f f ec t ed b y int er es t r a t e c h a ng e.

3 . I nt er es t r a t e s ens it iv it y g a p= I nt er es t r a t e s ens it iv e a s s et s - I nt er es t

r a t e s ens it iv e l ia b il it ies . 4 . R a t io o f int er es t r a t e s ens it iv e a s s et s t o l ia b il it ies = I nt er es t r a t e

s ens it iv e a s s et s / I nt er es t - r a t e- s ens it iv e l ia b il it ies ( deno m ina t ed in N T D )

86


8 6

( B ) S ens it iv it y a na l y s is o f int er es t r a t e f o r a s s et s a nd l ia b il it ies ( U S D )

D ec em b er 3 1 , 20 1 5

U nit I n T h o u s a nds o f U . S . D o l l a r s , %

Items 1~ 90 days (incl u s iv e)



Total


$ 1 3 , 0 1 9 , 7 1 6 9 1 2, 3 8 6 6 7 4 , 7 5 6 1 , 4 0 3 , 221 1 6 , 0 1 0 , 0 7 9


5 , 23 1 , 4 1 6 1 0 , 0 9 0 , 7 0 0 1 , 1 25 , 6 6 4 8 0 , 9 6 9 1 6 , 5 28 , 7 4 9


7 , 7 8 8 , 3 0 0 ( 9 , 1 7 8 , 3 1 4 ) ( 4 5 0 , 9 0 8 ) 1 , 3 22, 25 2 ( 5 1 8 , 6 7 0 )

N et w o r t h 7 , 0 5 8 , 9 4 0R a t io o f int er es t - r a t e- s ens it iv e a s s et s t o l ia b il it ies ( % ) 9 6 . 8 6R a t io o f int er es t r a t e s ens it iv it y g a p t o net w o r t h ( % ) ( 7 . 3 5 )

D ec em b er 3 1 , 20 1 4

U nit I n T h o u s a nds o f U . S . D o l l a r s , %

Items




Total


$ 1 2, 1 0 8 , 4 7 9 8 9 1 , 0 22 3 7 1 , 1 4 1 1 9 3 , 8 6 3 1 3 , 5 6 4 , 5 0 5


5 , 1 8 9 , 5 0 3 7 , 7 9 7 , 5 1 8 1 , 3 1 3 , 6 9 3 1 8 , 0 7 4 1 4 , 3 1 8 , 7 8 8


6 , 9 1 8 , 9 7 6 ( 6 , 9 0 6 , 4 9 6 ) ( 9 4 2, 5 5 2) 1 7 5 , 7 8 9 ( 7 5 4 , 28 3 )

N et w o r t h 6 , 28 4 , 4 4 1R a t io o f int er es t - r a t e- s ens it iv e a s s et s t o l ia b il it ies ( % ) 9 4 . 7 3R a t io o f int er es t r a t e s ens it iv it y g a p t o net w o r t h ( % ) ( 1 2. 0 0 )

N o t e 1 . T h e a f o r em ent io ned a r e t h e B a nk ’ s po s it io n deno m ina t ed in U S D ,

a nd do no t inc l u de c o nt ing ent a s s et o r l ia b il it ies . 2. I nt er es t r a t e s ens it iv e a s s et s a nd l ia b il it ies a r e t h e int er es t - ea r ning

a s s et o r int er es t - b ea r ing l ia b il it ies w h o s e r ev enu e o r c o s t s a r e a f f ec t ed b y int er es t r a t e c h a ng e.

3 . I nt er es t r a t e s ens it iv it y g a p= I nt er es t r a t e s ens it iv e a s s et s –

I nt er es t r a t e s ens it iv e l ia b il it ies . 4 . R a t io o f int er es t r a t e s ens it iv e a s s et s t o l ia b il it ies = I nt er es t r a t e

s ens it iv e a s s et s / I nt er es t r a t e s ens it iv e l ia b il it ies ( deno m ina t ed in U S D )

87


8 7

2. C r edit R is k M a na g em ent A. D ef init io n a nd s o u r c es o f c r edit r is k m a na g em ent

C r edit r is k o f t h e B a nk a nd it s s u b s idia r ies is t h e r is k o f f ina nc ia l l o s s if a c l ient , g u a r a nt o r o r c o u nt er pa r t y f a il s t o m eet it s c o nt r a c t u a l o b l ig a t io ns . C r edit r is k a r is es f r o m b o t h o n- b a l a nc e- s h eet it em s a nd o f f - b a l a nc e- s h eet it em s . O n- b a l a nc e- s h eet it em s inc l u de L o a n, D is c o u nt ing b il l s a nd no t es , C r edit C a r d, D u e f r o m C ent r a l B a nk a nd C a l l l o a ns t o b a nk s , D eb t I nv es t m ent a nd D er iv a t iv es T r a ns a c t io n a nd s o o n. O f f - b a l a nc e- s h eet it em s m a inl y inc l u de G u a r a nt ees , B a nk Ac c ept a nc e, L et t er o f C r edit a nd L o a n C o m m it m ent s .

B . O b j ec t iv es o f C r edit R is k M a na g em ent

T h e o b j ec t iv e o f c r edit r is k m a na g em ent o f t h e B a nk a nd it s s u b s idia r ies is m inim iz ing t h e po t ent ia l f ina nc ia l l o s s es b y a ppr o pr ia t e s t r a t eg ies , po l ic ies a nd pr o c edu r es . B y s t r eng t h ening c r edit r is k m a na g em ent f r a m ew o r k , w h ic h is t r a ns pa r ent , s y s t em a t ic , pr o f es s io na l a nd w el l - es t a b l is h ed, c r edit r is k m a na g em ent is r o o t ed in it s c o r po r a t e g o v er na nc e t o r einf o r c e b u s ines s per f o r m a nc e a nd im pr o v e s h a r eh o l der ’ s eq u it y .

C . C r edit R is k M a na g em ent P r o c es s a nd C r edit R is k M ea s u r em ent

a . C r edit r is k M a na g em ent P r o c es s

( A) R is k I dent if ic a t io n C r edit r is k c o m es f r o m t h e def a u l t r is k a nd s ig nif ic a nt dec l ine in c r edit q u a l it y o f a c r edit c l ient , c h a ng e o n c o l l a t er a l v a l u e o r t h e def a u l t r is k o f der iv a t iv es c o u nt er pa r t y . C r edit r is k f a c t o r s ident if ic a t io n s h a l l c o ns ider no t o nl y int er na l b u s ines s o per a t io ns b u t a l s o ext er na l env ir o nm ent a l c h a ng es .

( B ) R is k M ea s u r em ent

I n o r der t o a ppr o pr ia t el y ev a l u a t e a nd m o nit o r o b l ig o r ’ s c r edit r is k , t h e B a nk a nd it s s u b s idia r ies im pl em ent t h e int er na l r a t ing s y s t em f a c t o r ed in t h e c h a r a c t er is t ic s o f o b l ig o r s a nd pr o du c t s t o q u a nt if y it . T h e c o r r es po nding po l ic ies a nd pr o c edu r es a r e es t a b l is h ed a nd t h e r eg u l a r m o del v a l ida t io n m ec h a nis m is exec u t ed t o ens u r e t h e a ppr o pr ia t enes s a nd ef f ec t iv enes s o f t h e m o del . C r edit r is k m a na g em ent po l ic y a nd exper ienc ed c r edit o f f ic er s ’ j u dg m ent s u ppl em ent t h e c r edit r a t ing a ppl ic a t io n o n c r edit a ppr o v a l , f a c il it y m a na g em ent a nd per f o r m a nc e a na l y s is , et c .

( C ) R is k M o nit o r ing T o ens u r e c r edit r is k is u nder c o nt r o l , t h e B a nk a nd it s s u b s idia r ies h a v e es t a b l is h ed c r edit r is k l im it m a na g em ent m ec h a nis m a nd s et u p t h e inf o r m a t io n m a na g em ent s y s t em t o m o nit o r t h e c r edit r is k

88


8 8

po r t f o l io a nd r is k c o nc ent r a t io n s it u a t io n. T h e B a nk a nd it s s u b s idia r ies h a v e dev el o ped c o m pr eh ens iv e c r edit pr o c es s , s u c h a s c r edit ext ens io n a nd a nnu a l r ev iew pr o c edu r e, l o a n r ev iew m ec h a nis m , g u idel ine f o r ea r l y - w a r ning a nd w a t c h - l is t a c c o u nt s , g u idel ine f o r c o l l a t er a l a ppr a is em ent a nd m a na g em ent , r u l es o f pr e- s et t l em ent r is k m it ig a t io n, pr o c edu r e f o r b a d l o a n m a na g em ent , g u idel ine f o r pr o v is io n a l l o w a nc e a nd s o o n t o r edu c e t h e pr o b a b il it y o f l o s s a nd ens u r e o u r c l a im o n expo s u r e.

( D ) R is k R epo r t ing

R is k m a na g em ent u nit per io dic a l l y pr epa r es c r edit r is k po r t f o l io / m a na g em ent r epo r t a nd s u b m it s t h es e r epo r t s t o s enio r m a na g em ent . T h e r epo r t s dis c l o s e t h e B a nk a nd it s s u b s idia r ies ’ c r edit r is k pr o f il e f r o m v a r io u s dim ens io ns , s u c h a s c r edit q u a l it y , po r t f o l io c o nc ent r a t io n, indu s t r y s ec t o r expo s u r e, s c o r ec a r d m o del v a l ida t io n r es u l t , et c .

b . M ea s u r em ent o f C r edit R is k

( A) I nt er na l R a t ing S y s t em

T h e dev el o pm ent o f int er na l r a t ing s y s t em a nd t h e es t im a t io n o f pa r a m et er s f o r c r edit r is k m ea s u r em ent a r e b a s ed o n t h e B a nk a nd it s s u b s idia r ies ’ int er na l h is t o r ic a l da t a a nd t h e exper ienc e o f int er na l exper t s . T h e t h r ee m a j o r r is k c o m po nent s inc l u de P r o b a b il it y o f D ef a u l t ( P D ) , L o s s G iv en D ef a u l t ( L G D ) , a nd E xpo s u r e a t D ef a u l t ( E AD ) , w h ic h a r e u s ed t o m ea s u r e t h e expec t ed l o s s a nd u nexpec t ed l o s s , t o a s s is t t h e B a nk a nd it s s u b s idia r ies in t h eir s t a b l e g r o w t h o f l o ng - t er m o per a t io n. ( a ) P r o b a b il it y o f def a u l t

T h e B a nk a nd it s s u b s idia r ies ’ ins t it u t io na l b a nk ing g r o u p h a s dev el o ped v a r io u s s c o r ec a r d m o del s f o r J u m b o E nt er pr is e, M iddl e E nt er pr is e, S m a l l E nt er pr is e, R ea l E s t a t e D ev el o per a nd P er s o na l , et c . b a s ed o n o b l ig o r ’ s c h a r a c t er is t ic s , inc l u ding expo s u r e t y pes , indu s t r ia l c h a r a c t er is t ic s , r ev enu e s c a l es , a nd t h e c o r r es po ndent w it h t h e B a nk a nd it s s u b s idia r ies . T h e B a nk a nd it s s u b s idia r ies a l s o dev el o p a m a s t er s c a l e t o s eg m ent o b l ig o r ’ s def a u l t r is k ; ea c h s eg m ent o f t h e m a s t er s c a l e is a s s o c ia t ed w it h a pr edef ined o ne- y ea r f o r w a r d- l o o k ing pr o b a b il it y o f def a u l t . As f o r r et a il b a nk ing g r o u p, w e a l s o dev el o ped t h e r is k s eg m ent a t io n w it h pr edef ined o ne- y ea r f o r w a r d- l o o k ing pr o b a b il it y o f def a u l t , w h ic h is dev el o ped a c c o r ding t o o b l ig o r ’ s r is k c h a r a c t er is t ic s , s u c h a s c r edit s c o r e, a nd del inq u enc y s t a t u s .

89


8 9

( b ) L o s s g iv en def a u l t C T B C ins t it u t io na l b a nk ing g r o u p c a l c u l a t es t h e pa r a m et er s o f L G D , s u c h a s C o l l a t er a l R ec o v er y R a t e, b a s ed o n t h e pr o du c t c h a r a c t er is t ic s , c o l l a t er a l t y pes , a nd g u a r a nt ee f o r m s , et c . T h e pa r a m et er s a r e u s ed t o es t im a t e t h e L G D f o r ea c h f a c il it y . C T B C r et a il b a nk ing g r o u p es t a b l is h ed t h e L G D s eg m ent a t io n w it h l o ng - r u n def a u l t - w eig h t ed a v er a g e L G D , w h ic h is dev el o ped a c c o r ding t o t h e pr o du c t c h a r a c t er is t ic s a nd o b l ig o r ’ s pa y m ent b eh a v io r , s u c h a s L o a n- t o - v a l u e, expo s u r e, c o l l a t er a l t y pe, pa y m ent s t a t u s , et c .

( c ) E xpo s u r e a t def a u l t E xpo s u r e a t def a u l t is c a l c u l a t ed b y c u r r ent o u t s t a nding pl u s po t ent ia l ext r a o u t s t a nding a t def a u l t . T h e c r edit c o nv er s io n f a c t o r ( C C F ) f o r po t ent ia l ext r a o u t s t a nding a t def a u l t is c a l c u l a t ed b y t a k ing t h e f a c il it y c o m m it m ent , u s a g e r a t io , l o a n o u t s t a nding a nd h ea dr o o m int o c o ns ider a t io n. F o r o f f - b a l a nc e- s h eet expo s u r e, C C F is u s ed t o es t im a t e t h e po r t io n o f o f f - b a l a nc e- s h eet expo s u r e c o nv er t ed int o o n- b a l a nc e- s h eet if def a u l t .

( B ) S t r es s T es t ing D epending o n c r edit r is k m a t er ia l it y a nd b u s ines s s c a l e, s t r es s t es t ing o f c r edit r is k po r t f o l io s w a s im pl em ent ed. S t r es s t es t ing h el ps t h e B a nk a nd it s s u b s idia r ies a w a r e o f t h e po s s ib l e c h a ng e o f r is k c o m po nent r es u l t ing f r o m s t r es s ev ent , a nd a s s es s es t h e a m o u nt o f c a pit a l needed t o a b s o r b l o s s es o r pl a n r em edia l a c t io ns t o m it ig a t e t h e im pa c t o f exc ept io na l l o s s w h en s u c h inc ident o c c u r s .

D . M it ig a t io n o f C r edit R is k

a . C o l l a t er a l M a na g em ent I n a s s es s ing t h e c r edit ext ens io n, t h e b u s ines s pr o s pec t , f u t u r e c a s h f l o w , a nd r epa y m ent a b il it y a nd w il l ing nes s o f a n o b l ig o r a r e t h e m a in f a c t o r s f o r det er m ining t h e r epa y m ent c a pa b il it y . H o w ev er , f o r t h e c r edit o r ’ s s a k e, t h e B a nk , u nder g o v er nm ent r eg u l a t io ns , c o u l d a s k t h e o b l ig o r o r a t h ir d pa r t y t o del iv er pl edg e o f r ea l es t a t e, c h a t t el , o r s ec u r it ies a s c o l l a t er a l w h ic h c o u l d b e dis po s ed f o r r ec o v er ing t h e c r edit o r ’ s r ig h t if t h e o b l ig o r def a u l t s . I n o r der t o m a int a in t h e g o o d s t a nding v a l u e o f c o l l a t er a l , t h e B a nk a nd it s s u b s idia r ies h a v e es t a b l is h ed g u idel ines r eg a r ding c o l l a t er a l m a na g em ent , w h ic h is a s f o l l o w s . B y t a k ing t h e v o l a t il it y o f m a r k et v a l u e a nd t h e c h a r a c t er is t ic o f c o l l a t er a l int o a c c o u nt , t h e B a nk a nd it s s u b s idia r ies s et t h e t y pe o f c o l l a t er a l t h a t c a n b e pl edg ed a nd c o ns ider t h e h is t o r ic a l r ec o v er y s it u a t io n t o dr a w u p t h e h ig h es t l o a n t o v a l u e. T o v er if y t h e f a ir nes s o f t h e v a l u e o f t h e c o l l a t er a l , t h e v a l u e is ident if ied no t o nl y t h r o u g h v a l u a t io n r epo r t s is s u ed b y pr o f es s io na l a ppr a is er s b u t a l s o m a r k et pr ic e a nd t h e a c t u a l r eg is t er ed pr ic e. W it h t h e per io dic r ev a l u a t io n, t h e

90


90

a deq u a c y o f t h e g u a r a nt ee c a pa b il it y o f a n o b j ec t w h ic h is h ig h l y f l u c t u a t io na l c a n b e t im el y m o nit o r ed.

b . P r e- s et t l em ent r is k m it ig a t io n

F o r pr e- s et t l em ent r is k , t h e B a nk a nd it s s u b s idia r ies m ig h t t a k e m it ig a t io n a c t io ns s u c h a s c a l l ing f o r a ddit io na l c o l l a t er a l ( o r m a r g in) , s ig ning a net t ing a g r eem ent o r s ig ning a n ea r l y det er m ina t io n a g r eem ent s o a s t o r edu c e t h e c r edit l o s s .

c . P o s t - l ending l o a n r ev iew m ec h a nis m s

P o s t - l ending l o a n r ev iew m ec h a nis m r ef er s t h a t t h e B a nk a nd it s s u b s idia r ies per io dic a l l y m o nit o r c u s t o m er ’ s u s a g e o f f u nd, per f o r m a nc e a nd r epa y m ent c a pa b il it y s o a s t o c o nt r o l t h e c h a ng e o f c u s t o m er ’ s r is k . T h e r ev iew f r eq u enc y a nd c o nt ent depend o n t h e r is k g r a de o f c u s t o m er s . T h e B a nk a nd it s s u b s idia r ies s t ipu l a t ed G u idel ine f o r L o a n R ev iew s b a s ed o n t h e l ending pr inc ipl e is s u ed b y T h e B a nk er s As s o c ia t io n o f T h e R epu b l ic o f C h ina a nd C r edit O f f ic er S y s t em es t a b l is h ed b y t h e B a nk a nd it s s u b s idia r ies . L o a n r ev iew it em s c o v er c h a ng e o f b o r r o w er ’ s b u s ines s , ins pec t io n o f c r edit s t a nding , c h a ng e o f o per a t io n a nd f ina nc ia l c o ndit io n, c h a ng e o f t h e c o l l a t er a l v a l u e, c h a ng e o f b a nk deb t , t h e pr o c eeds in a c c o r da nc e w it h f u nding pu r po s e, a nd c h a ng e o f r epa y m ent s o u r c es a nd s o o n. I f t h er e is s ig nif ic a nt c h a ng e o f o b l ig o r ’ s c r edit r is k pr o f il e, t h e c r edit g r a de w il l b e r e- r a t ed a nd u nu s ed f a c il it y m ig h t b e a dj u s t ed depending o n t h e s it u a t io n.

d. C r edit R is k As s u r a nc e R ev iew I n o r der t o ens u r e t h e a deq u a c y o f ent ir e c r edit r is k m a na g em ent a nd c o nt r o l m ec h a nis m s , c r edit r is k po r t f o l io a nd c r edit r is k m a na g em ent pr o c es s a r e a s s es s ed, r ev iew ed, m o nit o r ed a nd exa m ined per io dic a l l y b y t h e B a nk a nd it s s u b s idia r ies , t o a s s is t t h e B a nk a nd it s s u b s idia r ies in t h eir s t a b l e g r o w t h o f l o ng - t er m o per a t io n.

e. E xt er na l g u a r a nt ee I n o r der t o enh a nc e t h e c r edit f o r w ea k s m a l l a nd m ediu m b u s ines s b o r r o w er s a nd r is k m it ig a t io n f o r t h e u ns ec u r ed expo s u r e o f s m a l l a nd m ediu m b u s ines s b o r r o w er , ext er na l g u a r a nt ee pr o v ided b y R . O . C S M E G f u nd a ppr o v ed b y g o v er nm ent is o ne o f t h e el ig ib l e g u a r a nt ees .

f . C o nc ent r a t io ns R is k M a na g em ent B es ides per io dic a nd int er m it t ent m o nit o r ing o f v a r io u s r is k c o m po nent s ’ c r edit r is k expo s u r e v ia dif f er ent r el ev a nt c r edit r is k m a na g em ent r epo r t s , t h e B a nk a nd it s s u b s idia r ies h a v e r is k l im it c o nt r o l m ec h a nis m , ef f ec t iv e a f t er a ppr o v a l b y t h e b o a r d o f dir ec t o r s , a t t h e r is k l ev el o f a s s et po r t f o l io a nd s ing u l a r c o ng l o m er a t e, c o ns ider ing t h a t c h a ng es in ext er na l m a c r o env ir o nm ent a r e l ik el y t o int r o du c e c o nc ent r a t io n r is k f r o m c l ient el e o f t h e s a m e c h a r a c t er is t ic s .

91


91

D im ens io ns o f l im it c eil ing m o nit o r ing inc l u de c o u nt r y r is k , h ig h r is k g r a de o b l ig o r s , pr o du c t t y pes , indu s t r y , pr e- s et t l em ent l im it , pr o j ec t l im it , c o l l a t er a l , c o nc ent r a t io n in t h e s a m e a f f il ia t e a nd t r a ding c o u nt er pa r t y , a nd s o o n.

E . M a xim u m expo s u r e t o c r edit r is k

W it h o u t t a k ing c o l l a t er a l o r o t h er c r edit enh a nc em ent m it ig a t io n ef f ec t int o a c c o u nt , t h e m a xim u m expo s u r e t o c r edit r is k o f o n- b a l a nc e- s h eet f ina nc ia l a s s et s is eq u a l t o t h eir c a r r y ing v a l u es . P l ea s e r ef er t o N o t e 6 ( AO ) ( 3 ) G . f o r o f f - b a l a nc e s h eet f ina nc ia l ins t r u m ent s ’ m a xim u m expo s u r e t o c r edit r is k s m a t u r it y a na l y s is .

F . C o nc ent r a t io ns o f c r edit r is k

S ig nif ic a nt c o nc ent r a t io ns o f c r edit r is k o c c u r w h en t h er e a r e expo s u r es , s ig nif ic a nt eno u g h t o t h r ea t en a B a nk ’ s s ec u r it y o r it s a b il it y t o m a int a in c o r e b u s ines s es , t o a n indiv idu a l c o u nt er pa r t y t o a t r a ns a c t io n o r a nu m b er o f r el a t ed c o u nt er pa r t ies eng a g e in s im il a r a c t iv it ies a nd h a v e s im il a r ec o no m ic c h a r a c t er is t ic s t h a t w o u l d c a u s e t h eir a b il it y t o m eet c o nt r a c t u a l o b l ig a t io ns t o b e s im il a r l y a f f ec t ed b y c h a ng es in ec o no m ic o r o t h er c o ndit io ns . C o nc ent r a t io ns o f c r edit r is k o r ig ina t e f r o m a s s et s , l ia b il it ies , a nd o f f - b a l a nc e- s h eet it em s b y m ea ns o f per f o r m ing a n o b l ig a t io n t o del iv er pr o du c t s o r s er v ic e, exec u t io n o f a t r a de, o r c o m b ina t io n o f c r o s s - c l a s s if ic a t io n expo s u r es . T h e B a nk a nd it s s u b s idia r ies h a v e pr o per int er na l po l ic ies , s y s t em s , a nd c o nt r o l s t o r ec o g niz e, m ea s u r e, m o nit o r , a nd c o nt r o l c o nc ent r a t io ns o f c r edit r is k . T h e f o l l o w ing t a b l e il l u s t r a t es t h e div er s if ic a t io n o f t h e l o a n po r t f o l io a m o ng indu s t r y s ec t o r s a nd g eo g r a ph ic a l r eg io ns o f t h e B a nk a nd it s s u b s idia r ies .

92


92

a . B y I ndu s t r y

December 31, 2015

Indiv idu a l

Cl ients

Serv ice

P u bl ic Sector

H igh Tech

Real Es tate

Manu f actu ring

Financial

Ins titu tion

Others

Total

R ec eiv a b l es — c r edit c a r d $ 5 7 , 5 9 5 , 5 1 9 - - - - - - - 5 7 , 5 9 5 , 5 1 9

R ec eiv a b l es — F a c t o r ing - 2, 27 2, 6 8 0 1 7 9 , 4 9 9 9 , 3 9 5 , 4 3 3 - 1 , 8 9 9 , 9 8 3 3 0 , 6 5 5 , 0 8 3 9 9 1 , 7 7 1 4 5 , 3 9 4 , 4 4 9

L o a ns

- C o ns u m er l o a ns 5 5 5 , 8 6 6 , 0 6 2 - - - - - - - 5 5 5 , 8 6 6 , 0 6 2

- C o r po r a t e l o a ns 5 4 , 26 2, 0 3 3 6 6 , 6 8 8 , 6 3 9 1 8 8 , 4 21 , 7 7 8 6 9 , 9 3 1 , 3 3 1 5 1 , 9 6 4 , 3 9 1 8 2, 1 1 3 , 4 0 8 1 2, 8 25 , 7 8 4 8 8 2, 8 0 4 5 27 , 0 9 0 , 1 6 8

- M ic r o - b u s ines s l o a ns 1 8 , 0 4 2, 4 3 3 1 , 4 7 7 , 8 5 6 4 , 3 0 0 3 4 6 , 9 9 9 4 6 2, 3 6 7 8 8 0 , 0 7 0 7 3 , 0 7 8 1 , 20 4 , 3 3 2 22, 4 9 1 , 4 3 5

- F o r eig n c u r r enc y l o a ns 26 5 , 3 26 , 1 7 7 21 9 , 8 5 6 , 1 3 0 2, 6 4 9 , 4 6 2 5 1 , 5 28 , 6 4 5 1 3 3 , 1 9 3 , 24 6 1 5 6 , 9 3 7 , 8 1 3 8 1 , 9 1 2, 1 6 5 8 , 1 9 2, 8 8 8 9 1 9 , 5 9 6 , 5 26

- N o n- a c c r u a l l o a ns 4 , 3 1 4 , 0 28 7 , 6 5 8 , 4 9 4 - 1 , 4 28 , 4 26 5 5 4 , 29 1 9 4 0 , 29 2 1 5 , 7 8 4 - 1 4 , 9 1 1 , 3 1 5

- Adj u s t m ent o f dis c o u nt

a nd pr em iu m

( 21 4 , 3 4 4 ) ( 6 1 9 , 8 7 4 ) ( 1 , 23 5 ) ( 7 9 , 8 6 1 ) ( 21 7 , 5 3 4 ) ( 7 2, 3 4 6 ) ( 7 6 , 9 4 0 ) ( 28 5 , 4 7 8 ) ( 1 , 5 6 7 , 6 1 2)

O t h er f ina nc ia l a s s et s 9 0 , 1 4 9 - - - - 4 , 3 4 5 - - 9 4 , 4 9 4

T o t a l $ 955,282,057 297,333,925 191,253,804 132,550,973 185,956,761 242,703,565 125,404,954 10,986,317 2,141,472,356

December 31, 2015 P u bl ic

Sector

Corp orate Financial

Ins titu tion Indiv idu al

Cl ients

Total Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －

deb t s ec u r i t ies $ 3 5 6 , 8 3 6 , 0 5 9 1 2, 1 25 , 0 9 3 6 6 , 1 7 2, 1 3 0 8 , 9 5 6 , 9 8 5 4 4 4 , 0 9 0 , 26 7

D er iv a t i v e f ina nc ia l a s s et s － h edg ing - - 1 0 7 , 5 26 - 1 0 7 , 5 26 H el d- t o - m a t u r it y f ina nc ia l a s s et s 1 22, 8 20 , 1 7 3 5 , 0 7 7 , 23 6 1 9 , 7 7 0 , 1 6 9 - 1 4 7 , 6 6 7 , 5 7 8 O t h er f ina nc ia l a s s et s deb t inv es t m ent

w it h o u t a c t i v e m a r k et -

1 4 , 226 , 1 3 4 - -

1 4 , 226 , 1 3 4

T o t a l $ 479,656,232 31,428,463 86,049,825 8,956,985 606,091,505

December 31, 2014

Indiv idu a l

Cl ients

Serv ice

P u bl ic Sector H igh Tech

Real Es tate

Manu f actu ring

Financial

Ins titu tion

Others

Total

R ec eiv a b l es — c r edit c a r d $ 5 9 , 6 3 8 , 7 6 4 - - - - - - - 5 9 , 6 3 8 , 7 6 4

R ec eiv a b l es — F a c t o r ing - 1 , 7 5 0 , 5 27 8 , 6 9 4 1 0 , 0 8 3 , 8 0 4 - 1 , 3 0 1 , 6 8 2 6 8 , 7 8 0 , 3 7 6 8 5 1 , 1 3 9 8 2, 7 7 6 , 222

L o a ns

- C o ns u m er l o a ns 4 6 5 , 9 24 , 7 0 5 - - - - - - - 4 6 5 , 9 24 , 7 0 5

- C o r po r a t e l o a ns 5 0 , 0 8 4 , 5 4 3 4 9 , 5 5 5 , 0 6 2 1 6 8 , 3 3 5 , 9 8 7 7 3 , 0 5 2, 8 25 4 2, 4 8 0 , 8 0 8 7 9 , 3 9 5 , 26 3 1 5 , 0 5 0 , 3 8 0 28 8 , 8 5 4 4 7 8 , 24 3 , 7 22

- M ic r o - b u s ines s l o a ns 1 3 , 1 7 4 , 7 3 9 1 , 0 5 7 , 4 8 7 - 21 4 , 6 8 0 27 3 , 1 5 3 5 4 4 , 3 3 7 4 0 , 7 1 4 7 6 2, 1 9 8 1 6 , 0 6 7 , 3 0 8

- F o r eig n c u r r enc y l o a ns 25 6 , 4 8 7 , 4 0 8 1 9 1 , 5 1 5 , 9 7 3 3 , 4 5 9 , 4 5 5 5 7 , 3 8 3 , 6 20 1 1 5 , 9 8 4 , 7 3 1 1 7 4 , 4 7 9 , 4 5 4 6 6 , 4 1 9 , 7 4 6 7 , 1 6 3 , 9 3 0 8 7 2, 8 9 4 , 3 1 7

- N o n- a c c r u a l l o a ns 4 , 4 6 3 , 0 20 7 , 7 4 5 , 3 3 4 - 1 , 0 4 2, 5 1 1 9 0 3 , 0 3 8 1 , 29 8 , 8 25 3 8 , 9 1 5 1 27 , 1 4 8 1 5 , 6 1 8 , 7 9 1

- Adj u s t m ent o f dis c o u nt

a nd pr em iu m

( 1 4 1 , 5 5 8 ) ( 5 9 3 , 0 24 ) ( 1 , 6 6 0 ) ( 3 6 , 3 3 5 ) ( 24 2, 4 7 6 ) ( 1 6 5 , 9 1 0 ) ( 1 6 4 , 1 6 7 ) ( 24 9 , 5 0 0 ) ( 1 , 5 9 4 , 6 3 0 )

O t h er f ina nc ia l a s s et s 9 1 , 7 0 7 - - - - 1 3 , 8 7 3 - - 1 0 5 , 5 8 0

T o t a l $ 849,723,328 251,031,359 171,802,476 141,741,105 159,399,254 256,867,524 150,165,964 8,943,769 1,989,674,779

December 31, 2014 P u bl ic

Sector

Corp orate Financial

Ins titu tion Indiv idu al

Cl ients

Total Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －

deb t s ec u r i t ies $ 4 6 8 , 5 1 9 , 0 0 0 7 , 9 1 3 , 4 21 5 5 , 1 6 5 , 0 1 5 9 , 1 7 7 , 21 3 5 4 0 , 7 7 4 , 6 4 9

D er iv a t i v e f ina nc ia l a s s et s － h edg ing - - 1 , 4 9 9 , 4 8 6 - 1 , 4 9 9 , 4 8 6 H el d- t o - m a t u r it y f ina nc ia l a s s et s 5 3 , 1 6 1 , 0 9 7 3 , 8 1 0 , 29 0 1 4 , 1 8 3 , 4 1 3 - 7 1 , 1 5 4 , 8 0 0 O t h er f ina nc ia l a s s et s deb t inv es t m ent

w it h o u t a c t i v e m a r k et - 1 7 , 6 4 7 , 7 5 9 -

- 1 7 , 6 4 7 , 7 5 9

T o t a l $ 521,680,097 29,371,470 70,847,914 9,177,213 631,076,694

93


93

b . B y Ar ea

December 31, 2015

Taiw an

North America As ia (ex cl u ding

Taiw an)

Others

Total Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －deb t

s ec u r it ies $ 27 5 , 3 5 9 , 4 8 0 5 4 , 4 9 7 , 8 7 1 9 3 , 4 5 9 , 5 1 0 20 , 7 7 3 , 4 0 6 4 4 4 , 0 9 0 , 26 7

D er iv a t i v e f ina nc ia l a s s et s － h edg ing 9 9 , 3 4 9 - - 8 , 1 7 7 1 0 7 , 5 26 R ec eiv a b l es － c r edit c a r d 5 7 , 5 9 5 , 5 1 9 - - - 5 7 , 5 9 5 , 5 1 9 R ec eiv a b l es － f a c t o r ing 5 , 4 7 7 , 5 9 6 1 , 7 1 6 , 4 8 1 3 5 , 4 4 8 , 3 27 2, 7 5 2, 0 4 5 4 5 , 3 9 4 , 4 4 9 L o a ns C o ns u m er f ina nc e － M o r t g a g e l o a ns 4 4 9 , 8 7 2, 1 9 4 - - - 4 4 9 , 8 7 2, 1 9 4 －Au t o m o b il e l o a ns 9 23 - - - 9 23 － C o ns u m er l o a ns 1 0 5 , 9 9 2, 9 4 5 - - - 1 0 5 , 9 9 2, 9 4 5 C o r po r a t e f ina nc e － C o r po r a t e l o a ns 5 24 , 1 27 , 0 5 0 - 2, 9 6 3 , 1 1 8 - 5 27 , 0 9 0 , 1 6 8 － M ic r o - b u s ines s l o a ns 22, 4 9 1 , 4 3 5 - - - 22, 4 9 1 , 4 3 5 F o r eig n c u r r enc y l o a ns 5 8 , 3 3 2, 5 8 5 9 0 , 6 3 1 , 6 6 2 7 5 1 , 3 0 8 , 5 7 4 1 9 , 3 23 , 7 0 5 9 1 9 , 5 9 6 , 5 26 N o n- a c c r u a l l o a ns 2, 0 4 8 , 8 0 3 25 6 , 7 3 9 1 2, 6 0 5 , 7 7 3 - 1 4 , 9 1 1 , 3 1 5 Adj u s t m ent o f dis c o u nt a nd pr em iu m ( 4 0 8 , 9 29 ) ( 3 2, 9 20 ) ( 8 26 , 8 21 ) ( 29 8 , 9 4 2) ( 1 , 5 6 7 , 6 1 2) H el d- t o - m a t u r it y f ina nc ia l a s s et s 8 7 , 1 3 8 , 8 0 3 3 2, 6 5 0 , 1 5 2 23 , 7 22, 7 29 4 , 1 5 5 , 8 9 4 1 4 7 , 6 6 7 , 5 7 8 O t h er f ina nc ia l a s s et s 9 0 , 1 4 9 - 1 4 , 23 0 , 4 7 9 - 1 4 , 3 20 , 6 28

T o t a l $ 1,588,217,902 179,719,985 932,911,689 46,714,285 2,747,563,861

December 31, 2014

Taiw an

North America As ia (ex cl u ding

Taiw an)

Others

Total Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －deb t

s ec u r it ies $ 3 20 , 4 4 4 , 6 0 5 5 0 , 4 7 0 , 9 22 1 3 9 , 5 3 6 , 9 25 3 0 , 3 22, 1 9 7 5 4 0 , 7 7 4 , 6 4 9

D er iv a t i v e f ina nc ia l a s s et s － h edg ing 8 6 , 8 1 3 - - 1 , 4 1 2, 6 7 3 1 , 4 9 9 , 4 8 6 R ec eiv a b l es － c r edit c a r d 5 9 , 6 3 8 , 7 6 4 - - - 5 9 , 6 3 8 , 7 6 4 R ec eiv a b l es － f a c t o r ing 7 , 8 8 4 , 7 4 4 7 8 4 , 7 8 5 7 1 , 5 4 3 , 4 0 6 2, 5 6 3 , 28 7 8 2, 7 7 6 , 222 L o a ns C o ns u m er f ina nc e － M o r t g a g e l o a ns 3 6 3 , 7 5 4 , 3 8 1 - - - 3 6 3 , 7 5 4 , 3 8 1 －Au t o m o b il e l o a ns 1 , 27 3 - - - 1 , 27 3 － C o ns u m er l o a ns 1 0 2, 1 6 9 , 0 5 1 - - - 1 0 2, 1 6 9 , 0 5 1 C o r po r a t e f ina nc e － C o r po r a t e l o a ns 4 7 4 , 5 4 6 , 1 23 - 3 , 6 9 7 , 5 9 9 - 4 7 8 , 24 3 , 7 22 － M ic r o - b u s ines s l o a ns 1 6 , 0 6 7 , 3 0 8 - - - 1 6 , 0 6 7 , 3 0 8 F o r eig n c u r r enc y l o a ns 6 3 , 8 5 4 , 4 21 7 4 , 7 6 6 , 3 7 4 7 20 , 3 4 0 , 9 28 1 3 , 9 3 2, 5 9 4 8 7 2, 8 9 4 , 3 1 7 N o n- a c c r u a l l o a ns 2, 5 24 , 23 3 1 20 , 9 26 1 2, 9 7 3 , 6 3 2 - 1 5 , 6 1 8 , 7 9 1 Adj u s t m ent o f dis c o u nt a nd pr em iu m ( 29 0 , 3 7 7 ) ( 1 2, 3 9 0 ) ( 1 , 0 4 1 , 5 6 6 ) ( 25 0 , 29 7 ) ( 1 , 5 9 4 , 6 3 0 ) H el d- t o - m a t u r it y f ina nc ia l a s s et s 4 5 , 4 4 0 , 3 3 1 7 7 , 8 6 5 22, 8 9 1 , 26 8 2, 7 4 5 , 3 3 6 7 1 , 1 5 4 , 8 0 0 O t h er f ina nc ia l a s s et s 9 1 , 7 0 7 - 1 5 , 7 7 7 , 0 22 1 , 8 8 4 , 6 1 0 1 7 , 7 5 3 , 3 3 9

T o t a l $ 1,456,213,377 126,208,482 985,719,214 52,610,400 2,620,751,473

94

CTB

C B

AN

K C

O.,

LTD

. AN

D S

UBS

IDIA

RIE

S

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS (C

ON

T’D

) 94

G.

Cre

dit q

ualit

y an

d im

pairm

ent a

naly

sis o

f fin

anci

al a

sset

s So

me

finan

cial

ass

ets

held

by

the

Ban

kan

d its

sub

sidi

arie

s, su

ch a

s ca

sh a

nd e

quiv

alen

t cas

h, d

ue fr

om c

entra

l ban

k, c

all l

oans

to

bank

s, fin

anci

al a

sset

s m

easu

red

at f

air

valu

e th

roug

h pr

ofit

or lo

ss, s

ecur

ities

pur

chas

ed u

nder

rev

erse

rep

urch

ase

agre

emen

ts,

refu

ndab

le d

epos

its,

oper

atio

nal

guar

ante

e de

posit

s, an

d se

ttlem

ent

fund

, ar

e ex

clud

ed f

rom

thi

s an

alys

is si

nce

mos

t of

co

unte

rpar

ties

are

norm

ally

with

goo

d cr

edit

qual

ity a

nd c

an b

e co

nsid

ered

as

low

cre

dit

risk.

Bel

ow t

able

s pr

ovid

e th

e cr

edit

qual

ity a

naly

sis

for t

he re

st o

f fin

anci

al a

sset

s.

D

ecem

ber

31, 2

015

N

eith

er P

ast d

ue n

or im

pair

ed

Pa

st d

ue n

ot im

pair

ed

Item

Inve

stm

ent

grad

e

Sub-

inve

stm

ent

grad

e

Hig

h R

isk

Gra

de

Subt

otal

(A)

Inve

stm

ent

grad

e

Sub-

inve

stm

ent

grad

e

Hig

h R

isk

Gra

de

Subt

otal

(B)

In

divi

dual

ly

asse

ssed

impa

ired

(C)

C

olle

ctiv

ely

asse

ssed

impa

ired

(D)

Impa

irm

ent

allo

wan

ces(

E)

Tota

l(A)+

(B)

+(C

)+(D

)-(E

)

A

vaila

ble-

for-s

ale

finan

cial

ass

ets－

debt

secu

ritie

s

$

36

4,90

0,25

8

78,6

78,0

08

-

44

3,57

8,26

6

-

-

-

-

512,

001

-

75

,297

444,

014,

970

D

eriv

ativ

e fin

anci

al a

sset

s－he

dgin

g

105,

449

2,

466

(3

89)

10

7,52

6

-

-

-

-

-

-

-

107,

526

R

ecei

vabl

es－

cred

it ca

rd

43

,882

,890

7,70

5,38

2

1,90

4,21

1

53,4

92,4

83

43

,014

104,

542

48

9,45

0

637,

006

-

3,

466,

030

1,

080,

809

56

,514

,710

R

ecei

vabl

es－

fact

orin

g

29,3

84,2

86

13

,606

,184

1,85

4,34

4

44,8

44,8

14

17

0,69

7

200,

029

11

7,10

0

487,

826

61

,809

-

82,2

71

45

,312

,178

Lo

ans

Cons

umer

fina

nce

－M

ortg

age

loan

s

434,

994,

722

4,

192,

306

40

0,37

7

439,

587,

405

2,

470,

486

1,

515,

303

86

1,96

7

4,84

7,75

6

-

5,43

7,03

3

443,

271

44

9,42

8,92

3

－A

utom

obile

loan

s

-

-

-

-

-

-

-

-

-

923

66

857

－Co

nsum

er lo

ans

75

,391

,475

16,4

63,9

25

3,

174,

884

95

,030

,284

553,

020

75

3,59

8

1,67

8,49

1

2,98

5,10

9

-

7,97

7,55

2

2,57

3,77

6

103,

419,

169

Corp

orat

e fin

ance

－Co

rpor

ate

loan

s

288,

789,

186

18

7,02

0,65

0

49,1

96,8

48

52

5,00

6,68

4

-

125,

762

20

9,59

8

335,

360

1,

748,

124

-

68

2,60

1

526,

407,

567

－M

icro

-bus

ines

s loa

ns

15

,690

,834

4,32

6,09

0

1,96

3,01

1

21,9

79,9

35

13

,929

4,19

4

33,9

09

52,0

32

22

,904

436,

564

13

,988

22,4

77,4

47

Fore

ign

curre

ncy

loan

s

380,

793,

792

38

7,54

6,00

5

144,

444,

420

91

2,78

4,21

7

381,

402

49

8,83

3

1,61

8,67

4

2,49

8,90

9

2,04

4,82

6

2,26

8,57

4

4,09

5,20

9

915,

501,

317

Non

-acc

rual

loan

s

-

-

-

-

-

-

7,51

1

7,51

1

10,1

76,2

29

4,

727,

575

6,

028,

828

8,

882,

487

Adj

ustm

ent o

f disc

ount

and

prem

ium

(5

75,0

11)

(6

98,8

99)

(3

26,8

62)

(1

,600

,772

)

621

16

6

(443

)

344

31

,645

1,17

1

(630

)

(1,5

66,9

82)

H

eld-

to-m

atur

ity fi

nanc

ial a

sset

s－ne

t

68,9

39,3

11

78

,727

,795

-

147,

667,

106

-

-

-

-

47

2

-

472

14

7,66

7,10

6

Oth

er fi

nanc

ial a

sset

s

9,93

1,18

3

1,12

8,86

3

3,16

6,08

8

14,2

26,1

34

-

-

-

-

4,

345

90

,149

106,

812

14

,213

,816

To

tal

$

1,7

12,2

28,3

75

77

8,69

8,77

5

205,

776,

932

2,

696,

704,

082

3,

633,

169

3,

202,

427

5,

016,

257

11

,851

,853

14,6

02,3

55

24

,405

,571

15,1

82,7

70

2,

732,

381,

091

Not

e: T

he b

alan

ces o

f im

pairm

ent a

llow

ance

, as s

how

n ab

ove,

are

in c

ompl

ianc

e w

ith th

e IF

RSs

acc

epte

d by

FSC

.

95

CTB

C B

AN

K C

O.,

LTD

. AN

D S

UBS

IDIA

RIE

S

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS (C

ON

T’D

) 95

D

ecem

ber

31, 2

014

N

eith

er P

ast d

ue n

or im

pair

ed

Pa

st d

ue n

ot im

pair

ed

Item

In

vest

men

t

grad

e

Su

b-in

vest

men

t

grad

e

H

igh

Ris

k

Gra

de

Subt

otal

(A)

In

vest

men

t

grad

e

Su

b-in

vest

men

t

grad

e

H

igh

Ris

k

Gra

de

Subt

otal

(B)

In

divi

dual

ly

asse

ssed

impa

ired

(C)

C

olle

ctiv

ely

asse

ssed

impa

ired

(D)

Im

pair

men

t

allo

wan

ces(

E)

To

tal(A

)+(B

)

+(C

)+(D

)-(E

)

A

vaila

ble-

for-s

ale

finan

cial

ass

ets－

debt

secu

ritie

s

$

491,

685,

518

48

,640

,622

129,

899

54

0,45

6,03

9

-

-

-

-

318,

610

-

5,

282

54

0,76

9,36

7

D

eriv

ativ

e fin

anci

al a

sset

s－he

dgin

g

1,33

7,64

1

161,

845

-

1,

499,

486

-

-

-

-

-

-

-

1,

499,

486

R

ecei

vabl

es－

cred

it ca

rd

45

,325

,647

7,90

4,15

4

2,00

9,86

3

55,2

39,6

64

13

9,80

4

135,

539

29

5,86

9

571,

212

-

3,

827,

888

1,

197,

489

58

,441

,275

R

ecei

vabl

es－

fact

orin

g

62,2

66,9

87

17

,077

,844

3,14

2,63

8

82,4

87,4

69

10

2,34

4

83,7

06

40

,894

226,

944

61

,809

-

109,

697

82

,666

,525

Loan

s

Cons

umer

fina

nce

－M

ortg

age

loan

s

336,

477,

220

4,

274,

628

53

7,05

5

341,

288,

903

13

,753

,959

1,26

5,73

5

458,

989

15

,478

,683

-

6,98

6,79

5

621,

242

36

3,13

3,13

9

－A

utom

obile

loan

s

-

-

-

-

-

-

-

-

-

1,27

3

130

1,

143

－Co

nsum

er lo

ans

69

,502

,443

16,2

75,1

94

3,

131,

444

88

,909

,081

2,63

4,04

8

1,24

5,60

3

1,09

2,80

2

4,97

2,45

3

-

8,28

7,51

7

2,64

4,40

8

99,5

24,6

43

Corp

orat

e fin

ance

－Co

rpor

ate

loan

s

254,

790,

211

15

8,06

5,86

8

54,7

16,2

34

46

7,57

2,31

3

2,00

0

27,9

60

13

5,46

0

165,

420

10

,505

,989

-

1,72

9,25

3

476,

514,

469

－M

icro

-bus

ines

s loa

ns

11

,189

,238

3,06

8,94

5

1,17

5,71

5

15,4

33,8

98

25

7,23

2

21,1

73

19

,241

297,

646

5,

515

33

0,24

9

15,5

28

16

,051

,780

Fore

ign

curre

ncy

loan

s

372,

646,

927

33

9,65

1,73

8

151,

305,

299

86

3,60

3,96

4

394,

941

45

0,44

0

2,17

5,95

0

3,02

1,33

1

4,37

0,72

5

1,89

8,29

7

5,12

7,59

5

867,

766,

722

Non

-acc

rual

loan

s

-

-

-

-

-

42,3

80

-

42

,380

10,2

84,1

54

5,

292,

257

6,

381,

940

9,

236,

851

Adj

ustm

ent o

f disc

ount

and

prem

ium

(5

45,6

87)

(7

12,2

97)

(2

90,9

19)

(1

,548

,903

)

427

(1

83)

(8

6)

15

8

(49,

381)

3,49

6

(979

)

(1,5

93,6

51)

H

eld-

to-m

atur

ity fi

nanc

ial a

sset

s－ne

t

25,6

53,4

52

45

,500

,875

-

71,1

54,3

27

-

-

-

-

47

3

-

473

71

,154

,327

O

ther

fina

ncia

l ass

ets

7,

815,

932

4,

415,

971

5,

415,

856

17

,647

,759

-

-

-

-

13,8

73

91

,707

133,

850

17

,619

,489

To

tal

$

1,67

8,14

5,52

9

644,

325,

387

22

1,27

3,08

4

2,54

3,74

4,00

0

17,2

84,7

55

3,

272,

353

4,

219,

119

24

,776

,227

25,5

11,7

67

26

,719

,479

17,9

65,9

08

2,

602,

785,

565

N

ote:

The

bal

ance

s of i

mpa

irmen

t allo

wan

ce, a

s sho

wn

abov

e, a

re in

com

plia

nce

with

the

IFR

Ss a

ccep

ted

by F

SC.

96


96

H . Ag ing a na l y s is o n pa s t du e b u t no t im pa ir ed f ina nc ia l a s s et s P a s t du e b u t no t im pa ir ed l o a ns m ig h t r es u l t f r o m s o m e t em po r a r y a dm inis t r a t io n r ea s o ns s o t h e c u s t o m er is in t h e ea r l y s t a g es o f del inq u enc y b u t no a c t u a l im pa ir m ent h a s o c c u r r ed y et . U nl es s t h er e is o t h er o b j ec t iv e ev idenc e s h o w n t h e po t ent ia l l o s s , a c c o r ding t o int er na l c r edit r is k a s s et s im pa ir m ent ev a l u a t io n g u idel ine, a l es s t h a n 9 0 - da y pa s t du e l o a n is t y pic a l l y no t t o b e t r ea t ed a s im pa ir m ent .

December 31, 2015 Up to 1 month 1- 2 months 2- 3 months Ov er 3 months Total

R ec eiv a b l es - C r edit c a r ds $ 4 5 1 , 1 7 8 1 25 , 27 2 6 0 , 5 5 6 - 6 3 7 , 0 0 6 - F a c t o r ing 21 2, 3 7 3 1 7 2, 6 4 7 9 4 7 1 0 1 , 8 5 9 4 8 7 , 8 26 L o a ns C o ns u m er f ina nc e - M o r t g a g e l o a ns 4 , 7 0 1 , 5 8 5 1 3 2, 3 4 6 1 3 , 8 25 - 4 , 8 4 7 , 7 5 6 - C o ns u m er l o a ns 2, 5 4 2, 5 21 3 0 1 , 1 3 8 1 4 1 , 4 5 0 - 2, 9 8 5 , 1 0 9 C o r po r a t e f ina nc e - C o r po r a t e l o a ns 3 1 6 , 24 7 1 8 , 9 28 1 8 5 - 3 3 5 , 3 6 0 - M i c r o - b u s ines s l o a ns 3 9 , 6 1 4 1 2, 4 0 9 9 - 5 2, 0 3 2 F o r eig n c u r r enc y l o a ns 1 , 5 1 9 , 1 9 7 7 8 2, 23 6 1 9 7 , 4 7 6 - 2, 4 9 8 , 9 0 9 N o n- a c c r u a l l o a ns 7 , 5 1 1 - - - 7 , 5 1 1 Adj u s t m ent o f dis c o u nt a nd

pr em iu m 5 9 4 ( 3 6 7 ) 1 1 7 - 3 4 4

T o t a l $ 9,790,820 1,544,609 414,565 101,859 11,851,853

December 31, 2014 Up to 1 month 1- 2 months 2- 3 months Ov er 3 months Total

R ec eiv a b l es - C r edit c a r ds $ 4 1 7 , 9 1 2 1 0 5 , 4 23 4 7 , 8 7 7 - 5 7 1 , 21 2 - F a c t o r ing 1 20 , 7 1 2 9 7 , 3 1 9 2, 0 4 5 6 , 8 6 8 226 , 9 4 4 L o a ns C o ns u m er f ina nc e - M o r t g a g e l o a ns 1 5 , 29 3 , 8 0 5 1 6 9 , 6 27 1 5 , 25 1 - 1 5 , 4 7 8 , 6 8 3 - C o ns u m er l o a ns 4 , 5 6 8 , 9 1 7 27 8 , 0 5 2 1 25 , 4 8 4 - 4 , 9 7 2, 4 5 3 C o r po r a t e f ina nc e - C o r po r a t e l o a ns 1 6 5 , 4 20 - - - 1 6 5 , 4 20 - M i c r o - b u s ines s l o a ns 29 3 , 3 7 9 3 , 3 4 5 9 22 - 29 7 , 6 4 6 F o r eig n c u r r enc y l o a ns 1 , 9 3 3 , 3 9 0 8 7 3 , 5 29 21 4 , 4 1 2 - 3 , 0 21 , 3 3 1 N o n- a c c r u a l l o a ns 4 2, 3 8 0 - - - 4 2, 3 8 0 Adj u s t m ent o f dis c o u nt a nd

pr em iu m 23 0 1 4 ( 8 6 ) - 1 5 8

T o t a l $ 22,836,145 1,527,309 405,905 6,868 24,776,227

97


97

I . I m pa ir m ent a na l y s is o n im pa ir ed f ina nc ia l a s s et s

December 31, 2015

Indiv idu al l y as s es s ed imp aired ex p os u re

Col l ectiv el y

as s es s ed imp aired ex p os u re

Indiv idu al l y

as s es s ed imp airment al l o w ances

Col l ectiv el y


Net imp aired Ex p os u re

Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s - deb t inv es t m ent

$ 5 1 2 , 0 0 1 - 7 5 , 29 7 - 4 3 6 , 7 0 4

R ec eiv a b l es - C r edit c a r ds - 3 , 4 6 6 , 0 3 0 - 4 3 2, 21 2 3 , 0 3 3 , 8 1 8 - F a c t o r ing 6 1 , 8 0 9 - 6 1 , 8 0 9 - - L o a ns C o ns u m er f ina nc e - M o r t g a g e l o a ns - 5 , 4 3 7 , 0 3 3 - 3 26 , 3 8 9 5 , 1 1 0 , 6 4 4 - Au t o m o b i l e l o a ns - 9 23 - 6 6 8 5 7 - C o ns u m er l o a ns - 7 , 9 7 7 , 5 5 2 - 1 , 0 20 , 0 4 7 6 , 9 5 7 , 5 0 5 C o r po r a t e f ina nc e - C o r po r a t e l o a ns 1 , 7 4 8 , 1 24 - 3 4 5 , 5 3 0 - 1 , 4 0 2, 5 9 4 - M ic r o - b u s ines s l o a ns 22, 9 0 4 4 3 6 , 5 6 4 2, 7 5 0 5 23 4 5 6 , 1 9 5 F o r eig n c u r r enc y l o a ns 2, 0 4 4 , 8 26 2, 26 8 , 5 7 4 6 9 8 , 4 3 1 8 0 , 1 3 7 3 , 5 3 4 , 8 3 2 N o n- a c c r u a l l o a ns 1 0 , 1 7 6 , 229 4 , 7 27 , 5 7 5 3 , 6 6 3 , 6 4 4 2, 3 6 5 , 1 8 4 8 , 8 7 4 , 9 7 6 Adj u s t m ent o f dis c o u nt a nd

pr em iu m 3 1 , 6 4 5 1 , 1 7 1 - - 3 2, 8 1 6

H el d- t o - m a t u r it y f ina nc ia l a s s et s －net 4 7 2 - 4 7 2 - - O t h er f ina nc ia l a s s et s 4 , 3 4 5 9 0 , 1 4 9 1 , 7 3 8 7 7 , 6 9 2 1 5 , 0 6 4

T o t a l $ 14,602,355 24,405,571 4,849,671 4,302,250 29,856,005

December 31, 2014

Indiv idu al l y


Col l ectiv el y


Indiv idu al l y


Col l ectiv el y


Net imp aired Ex p os u re

Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s - deb t inv es t m ent

$ 3 1 8 , 6 1 0 - 5 , 28 2 - 3 1 3 , 3 28

R ec eiv a b l es

- C r edit c a r ds - 3 , 8 27 , 8 8 8 - 4 8 7 , 6 1 0 3 , 3 4 0 , 27 8 - F a c t o r ing 6 1 , 8 0 9 - 6 1 , 8 0 9 - - L o a ns C o ns u m er f ina nc e - M o r t g a g e l o a ns - 6 , 9 8 6 , 7 9 5 - 5 1 9 , 6 4 4 6 , 4 6 7 , 1 5 1 - Au t o m o b i l e l o a ns - 1 , 27 3 - 1 3 0 1 , 1 4 3 - C o ns u m er l o a ns - 8 , 28 7 , 5 1 7 - 1 , 1 0 8 , 0 7 0 7 , 1 7 9 , 4 4 7 C o r po r a t e f ina nc e

- C o r po r a t e l o a ns 1 0 , 5 0 5 , 9 8 9 - 1 , 3 0 6 , 20 1 - 9 , 1 9 9 , 7 8 8 - M ic r o - b u s ines s l o a ns 5 , 5 1 5 3 3 0 , 24 9 2, 3 6 9 6 8 5 3 3 2, 7 1 0 F o r eig n c u r r enc y l o a ns 4 , 3 7 0 , 7 25 1 , 8 9 8 , 29 7 1 , 1 1 4 , 6 8 2 9 5 , 0 1 8 5 , 0 5 9 , 3 22 N o n- a c c r u a l l o a ns 1 0 , 28 4 , 1 5 4 5 , 29 2, 25 7 4 , 1 7 8 , 8 1 6 2, 4 3 5 , 24 9 8 , 9 6 2, 3 4 6 Adj u s t m ent o f dis c o u nt a nd

pr em iu m ( 4 9 , 3 8 1 ) 3 , 4 9 6 - - ( 4 5 , 8 8 5 )

H el d- t o - m a t u r it y f ina nc ia l a s s et s －net 4 7 3 - - - 4 7 3 O t h er f ina nc ia l a s s et s 1 3 , 8 7 3 9 1 , 7 0 7 6 , 9 3 7 7 9 , 5 6 2 1 9 , 0 8 1

T o t a l $ 25,511,767 26,719,479 6,676,096 4,725,968 40,829,182

98


98

J . F o r ec l o s ed pr o per t ies F o r ec l o s ed pr o per t ies o f t h e B a nk a nd it s s u b s idia r ies a r e c l a s s if ied u nder o t h er a s s et s . P l ea s e r ef er t o N o t e 6 ( Q ) .

K . D is c l o s u r es r eq u ir ed b y t h e R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f

F ina nc ia l R epo r t s b y P u b l ic B a nk s

a . As s et q u a l it y o f t h e B a nk a nd it s s u b s idia r ies ’ no n- per f o r m ing l o a ns a nd o v er du e r ec eiv a b l es ( A) As s et q u a l it y o f t h e B a nk a nd it s s u b s idia r ies


Month/ Y ear December 31, 2015 Categories / Items

Non- p erf orming l oans

Total l oans

Non- p erf orming l oans ratio

Al l ow ance f or credit l os s es Cov erage ratio

C o r po r a t e f ina nc e

S ec u r ed U ns ec u r ed ( N o t e 1 0 )

8 , 9 9 2, 4 4 4 4 5 4 , 8 0 8 , 5 4 7 1 . 9 8 % 1 4 , 9 3 1 , 5 8 1

1 29 . 7 0 % 2, 5 20 , 0 9 5 7 6 2, 3 7 3 , 9 4 7 0 . 3 3 %

R es ident ia l m o r t g a g es 1 , 8 1 9 , 9 6 9 6 4 9 , 23 1 , 3 4 2 0 . 28 % 6 , 1 6 9 , 5 5 4 3 3 8 . 9 9 % C a s h c a r ds 7 6 , 9 8 0 3 , 1 1 7 , 4 5 9 2. 4 7 % 1 6 7 , 3 4 3 21 7 . 3 9 %

C o ns u m er M ic r o - c r edit O r ig ina l 1 , 9 8 0 , 23 5 1 0 6 , 7 0 1 , 0 8 3 1 . 8 6 % 4 , 9 7 9 , 9 0 4 25 1 . 4 8 % f ina nc e l o a ns P u r c h a s e - 8 7 , 7 20 - % 3 - % O t h er s S ec u r ed 28 7 , 5 6 3 5 8 , 24 8 , 0 7 4 0 . 4 9 % 7 7 8 , 3 4 1 1 25 . 24 %

U ns ec u r ed 3 3 3 , 9 4 0 5 , 3 8 7 , 3 3 4 6 . 20 % T o t a l l o a n b u s ines s 1 6 , 0 1 1 , 226 2, 0 3 9 , 9 5 5 , 5 0 6 0 . 7 8 % 27 , 0 26 , 7 26 1 6 8 . 8 0 %

Ov erdu e receiv abl es

Bal ance of receiv abl es

Del inq u ency ratio


C r edit c a r ds b u s ines s 8 6 , 5 1 2 5 7 , 5 9 4 , 3 26 0 . 1 5 % 1 , 1 5 6 , 7 5 9 1 , 3 3 7 . 1 1 % W it h o u t - r ec o u r s e f a c t o r ing - 4 5 , 3 9 4 , 4 4 9 - % 7 8 2, 1 8 8 - %

Month/ Y ear December 31, 2014

Categories / Items

Non- p erf orming l oans

Total l oans

Non- p erf orming l oans ratio


C o r po r a t e f ina nc e

S ec u r ed U ns ec u r ed ( N o t e 1 0 )

1 1 , 0 7 5 , 24 9 4 24 , 4 3 9 , 20 6 2. 6 1 % 1 6 , 0 6 2, 1 3 8

1 25 . 6 2% 1 , 7 1 0 , 9 0 3 6 9 7 , 0 6 6 , 7 26 0 . 25 %

R es ident ia l m o r t g a g es 1 , 7 1 6 , 7 0 7 5 6 4 , 224 , 6 7 4 0 . 3 0 % 5 , 1 6 3 , 3 1 4 3 0 0 . 7 7 % C a s h c a r ds 9 3 , 5 4 3 3 , 5 29 , 6 7 8 2. 6 5 % 24 0 , 1 3 9 25 6 . 7 2%

C o ns u m er M ic r o - c r edit O r ig ina l 2, 224 , 4 0 7 1 0 3 , 7 0 5 , 7 3 7 2. 1 4 % 4 , 7 6 2, 8 0 7 21 4 . 1 2% f ina nc e l o a ns P u r c h a s e - 6 9 3 - % 4 - % O t h er s S ec u r ed 4 4 3 , 7 1 5 5 0 , 4 3 6 , 7 5 6 0 . 8 8 % 9 0 7 , 6 4 1 1 0 8 . 23 %

U ns ec u r ed 3 9 4 , 8 7 2 5 , 3 4 5 , 3 7 3 7 . 3 9 % T o t a l l o a n b u s ines s 1 7 , 6 5 9 , 3 9 6 1 , 8 4 8 , 7 4 8 , 8 4 3 0 . 9 6 % 27 , 1 3 6 , 0 4 3 1 5 3 . 6 6 %

Ov erdu e receiv abl es

Bal ance of receiv abl es

Del inq u ency ratio


C r edit c a r ds b u s ines s 8 7 , 9 8 9 5 9 , 6 4 2, 1 29 0 . 1 5 % 1 , 27 5 , 0 6 1 1 , 4 4 9 . 1 1 % W it h o u t - r ec o u r s e f a c t o r ing - 8 2, 7 7 6 , 222 - % 6 1 5 , 6 8 5 - %

N o t e 1 : N o n- per f o r m ing l o a ns r epr es ent t h e a m o u nt o f o v er du e l o a ns a s

r epo r t ed in a c c o r da nc e w it h t h e “ R eg u l a t io ns o n t h e P r o c edu r es f o r B a nk ing I ns t it u t io ns t o E v a l u a t e As s et s a nd D ea l w it h P a s t D u e/ N o n- per f o r m ing L o a ns . ” T h e c r edit c a r d o v er du e l o a ns r epr es ent t h e a m o u nt o f o v er du e l o a ns a s r epo r t ed in a c c o r da nc e w it h J in- K u a n- Y in- ( 4 ) - Z i N o . 0 9 4 4 0 0 0 3 7 8 , da t ed J u l y 6 , 20 0 5 .

99


99

N o t e 2: N o n- per f o r m ing l o a ns r a t io = N o n- per f o r m ing l o a ns ÷ t o t a l l o a ns ; C r edit c a r d del inq u enc y r a t io = O v er du e r ec eiv a b l es ÷ b a l a nc e o f r ec eiv a b l es .

N o t e 3 : C o v er a g e r a t io f o r l o a ns = a l l o w a nc e f o r c r edit l o s s es ÷

no n- per f o r m ing l o a ns ; C o v er a g e r a t io f o r c r edit c a r d = a l l o w a nc e f o r c r edit l o s s es ÷ o v er du e r ec eiv a b l es .

N o t e 4 : F o r r es ident ia l m o r t g a g e l o a ns , a b o r r o w er pr o v ides h is / h er ( o r

s po u s e’ s o r m ino r c h il d’ s ) h o u s e a s c o l l a t er a l in f u l l a nd pl edg es it t o t h e f ina nc ia l ins t it u t io n f o r t h e pu r po s e o f o b t a ining f u nds t o pu r c h a s e pr o per t y a nd t o c o ns t r u c t o r r epa ir a h o u s e.

N o t e 5 : M ic r o c r edit l o a ns a r e def ined b y J in- K u a n- Y in- ( 4 ) - Z i N o .

0 9 4 4 0 0 1 0 9 5 0 , da t ed D ec em b er 1 9 , 20 0 5 , a nd do no t inc l u de c r edit c a r ds o r c a s h c a r ds .

N o t e 6 : O t h er s in c o ns u m er f ina nc e a r e s ec u r ed a nd u ns ec u r ed c o ns u m er l o a ns

o t h er t h a n r es ident ia l m o r t g a g e l o a ns , c a s h c a r ds , a nd m ic r o c r edit l o a ns , a nd do no t inc l u de c r edit c a r ds .

N o t e 7 : I n a c c o r da nc e w it h J in- K u a n- Y in- ( 5 ) - Z i N o . 0 9 4 0 0 0 4 9 4 , da t ed J u l y

1 9 , 20 0 5 , t h e a m o u nt s o f w it h o u t - r ec o u r s e f a c t o r ing w il l b e c l a s s if ied a s o v er du e r ec eiv a b l es w it h in 3 m o nt h s a f t er t h e da t e t h a t s u ppl ier s o r ins u r a nc e c o m pa nies r es o l v e no t t o c o m pens a t e t h e l o s s .

N o t e 8 : T h e b a l a nc es o f im pa ir m ent a l l o w a nc e, a s s h o w n a b o v e, a r e c a l c u l a t ed in a c c o r da nc e w it h t h e I F R S s a c c ept ed b y F S C a nd “ R eg u l a t io ns G o v er ning t h e P r o c edu r es f o r B a nk ing I ns t it u t io ns t o E v a l u a t e As s et s a nd D ea l w it h N o n- per f o r m ing / N o n- a c c r u a l L o a ns , ” a nd o t h er r el a t ed r eg u l a t io ns . Addit io na l l y , t h e a m o u nt s exc l u de no n- a c c r u a l l o a ns a r is ing f r o m g u a r a nt ees . R el a t ed a l l o w a nc e f o r c r edit l o s s es is r ec o g niz ed u nder pr o v is io ns .

N o t e 9 : S u ppl em ent a l dis c l o s u r es :

T h e inf o r m a t io n b el o w s h o w s s u ppl em ent a l dis c l o s u r es o f t h e B a nk ’ s l o a ns a nd r ec eiv a b l es t h a t m a y b e exem pt ed f r o m r epo r t ing a s no n- per f o r m ing l o a ns a nd o v er du e r ec eiv a b l es , r es pec t iv el y .


December 31, 2015 December 31, 2014 Loans that may be

ex emp ted f rom rep orting as a

non- p erf orming l oan

Receiv abl es that may be ex emp ted f rom rep orting as

ov erdu e receiv abl es

Loans that may be ex emp ted f rom rep orting as a

non- p erf orming l oan

Receiv abl es that may be ex emp ted f rom rep orting as

ov erdu e receiv abl es

P u r s u a nt t o a c o nt r a c t u nder a deb t neg o t ia t io n pl a n ( N o t e 1 )

1 1 1 , 5 0 6 9 2, 6 5 5 1 5 0 , 7 4 3 9 1 , 4 8 5

P u r s u a nt t o a c o nt r a c t u nder a deb t l iq u ida t io n pl a n a nd a deb t r el ief pl a n ( N o t e 2)

6 1 9 , 7 1 2 7 1 , 0 1 8 5 0 3 , 6 6 7 7 2, 1 5 4

T o t a l 7 3 1 , 21 8 1 6 3 , 6 7 3 6 5 4 , 4 1 0 1 6 3 , 6 3 9

100


10 0

N o t e 1 : I n a c c o r da nc e w it h J in- K u a n- Y in- ( 1 ) - Z i N o . 0 9 5 1 0 0 0 1 27 0 , da t ed Apr il 25 , 20 0 6 , a b a nk is r eq u ir ed t o m a k e s u ppl em ent a l dis c l o s u r e o f c r edit inf o r m a t io n w h ic h w a s a ppr o v ed u nder t h e “ deb t c o o r dina t io n m ec h a nis m o f u ns ec u r ed c o ns u m er deb t s b y t h e B a nk er s As s o c ia t io n o f t h e R . O . C ” .

N o t e 2: I n a c c o r da nc e w it h J in- K u a n- Y in- ( 1 ) - Z i N o . 0 9 7 0 0 3 1 8 9 4 0 ,

da t ed S ept em b er 1 5 , 20 0 8 , a b a nk is r eq u ir ed t o m a k e s u ppl em ent a l dis c l o s u r e o f c r edit inf o r m a t io n o nc e deb t o r s a ppl y f o r pr e- neg o t ia t io n, r el ief a nd l iq u ida t io n u nder t h e “ C o ns u m er D eb t C l ea r a nc e Ac t . ”

N o t e 1 0 : T h o s e l o a ns t h a t a r e no t 1 0 0 % b a c k ed b y c o l l a t er a l a r e c l a s s if ied a s

u ns ec u r ed.

b . C o nc ent r a t io n o f t h e B a nk ’ s c r edit ext ens io ns

U nit I n T h o u s a nds o f N ew T a iw a n D o l l a r s % December 31, 2015 Rank ing Enterp ris e grou p by indu s try s ector Credit amou nt

Credit amou nt/ s tock hol ders ’

eq u ity (% ) 1 A g r o u p. L iq u id c r y s t a l pa nel a nd c o m po nent s

m a nu f a c t u r ing 1 2, 7 8 8 , 8 20 5 . 4 8 %

2 B g r o u p. L iq u id c r y s t a l pa nel a nd c o m po nent s m a nu f a c t u r ing

1 0 , 9 7 4 , 1 6 8 4 . 7 0 %

3 C g r o u p. M a r ine s h ipping 1 0 , 8 7 4 , 5 5 5 4 . 6 6 % 4 D g r o u p C a b l e a nd o t h er pa y pr o g r a m b r o a dc a s t

indu s t r y 1 0 , 20 5 , 4 5 3 4 . 3 7 %

5 E g r o u p. P r int c ir c u it s m a nu f a c t u r ing 7 , 3 9 7 , 8 6 9 3 . 1 7 % 6 F g r o u p. C em ent pr o du c t s m a nu f a c t u r ing 6 , 5 9 8 , 3 5 1 2. 8 3 % 7 G g r o u p. W ir es a nd c a b l es m a nu f a c t u r ing 6 , 4 0 6 , 0 1 7 2. 7 4 % 8 H g r o u p. C o ns u l t ing g r o u p 6 , 20 7 , 25 3 2. 6 6 % 9 I g r o u p. M a r ine f r eig h t f o r w a r der 5 , 7 4 2, 1 8 5 2. 4 6 % 1 0 J g r o u p. O t h er u nc l a s s if ied f ina nc ia l int er m edia r ies 5 , 6 21 , 4 0 9 2. 4 1 %

December 31, 2014

Rank ing Enterp ris e grou p by indu s try s ector Credit amou nt Credit amou nt/ s tock hol ders ’

eq u ity (% ) 1 A g r o u p. L iq u id c r y s t a l pa nel a nd c o m po nent s

m a nu f a c t u r ing 1 4 , 0 6 8 , 9 0 0 7 . 0 6 %

2 B g r o u p. L iq u id c r y s t a l pa nel a nd c o m po nent s m a nu f a c t u r ing

1 1 , 3 4 9 , 7 1 1 5 . 6 9 %

3 C g r o u p. M a r ine s h ipping 1 0 , 3 1 5 , 1 3 5 5 . 1 7 % 4 E g r o u p. P r int c ir c u it s m a nu f a c t u r ing 8 , 3 22, 7 0 4 4 . 1 8 % 5 K g r o u p. O t h er r et a il s a l e 7 , 26 4 , 226 3 . 6 4 % 6 L g r o u p. O t h er u nc l a s s if ied el ec t r o nic c o m po nent s

m a nu f a c t u r ing 6 , 3 4 4 , 3 7 7 3 . 1 8 %

7 M g r o u p. I nt eg r a t ed c ir c u it s m a nu f a c t u r ing 6 , 26 5 , 7 1 7 3 . 1 4 % 8 F g r o u p. C em ent pr o du c t s m a nu f a c t u r ing 5 , 4 6 3 , 0 1 3 2. 7 4 % 9 N g r o u p. P et r o l eu m a nd c o a l pr o du c t s m a nu f a c t u r ing 5 , 21 5 , 0 0 0 2. 6 2% 1 0 O g r o u p. Au t o m o b il e pa r t s m a nu f a c t u r ing 5 , 1 9 1 , 7 8 3 2. 6 0 %

101


10 1

N o t e 1 : T h e t o p t en ent er pr is e g r o u ps o t h er t h a n g o v er nm ent o r s t a t e- o w ned ent er pr is es a r e r a nk ed a c c o r ding t o t h eir t o t a l o u t s t a nding c r edit a m o u nt . I f t h e b o r r o w er s b el o ng t o a n ent er pr is e g r o u p, t h e a g g r eg a t e c r edit b a l a nc e o f t h e ent er pr is e s h o u l d b e c a l c u l a t ed a nd dis c l o s ed a s a c o de nu m b er f o r ea c h s u c h b o r r o w er t o g et h er w it h a n indic a t io n o f t h e b o r r o w er s ’ l ine o f b u s ines s . I n a ddit io n, if t h e b o r r o w er s a r e ent er pr is e g r o u ps , t h e ent er pr is e g r o u p’ s indu s t r y s ec t o r w it h t h e m a xim u m expo s u r e t o c r edit r is k in it s m a in indu s t r y s ec t o r s h o u l d b e dis c l o s ed, a l o ng w it h t h e “ c l a s s ” o f t h e indu s t r y , in c o m pl ia nc e w it h t h e S t a nda r d I ndu s t r ia l C l a s s if ic a t io n S y s t em o f t h e R . O . C . po s t ed b y t h e D ir ec t o r a t e- G ener a l o f B u dg et , Ac c o u nt ing a nd S t a t is t ic s , E xec u t iv e Y u a n, R . O . C .

N o t e 2: E nt er pr is e g r o u p is a s def ined in Ar t ic l e 6 o f t h e “ S u ppl em ent a r y

P r o v is io ns t o t h e T a iw a n S t o c k E xc h a ng e C o r po r a t io n R u l es f o r o f S ec u r it ies L is t ing s . ”

N o t e 3 : T h e t o t a l o u t s t a nding c r edit a m o u nt is t h e s u m o f t h e b a l a nc es o f

a l l l o a n t y pes ( inc l u ding im po r t a nd expo r t b il l neg o t ia t io ns , l o a ns , o v er dr a f t s , s h o r t / m ediu m / l o ng - t er m s ec u r ed a nd u ns ec u r ed l o a ns , m a r g in l o a ns r ec eiv a b l e, a nd no n- a c c r u a l l o a ns ) , b il l s pu r c h a s ed, w it h o u t - r ec o u r s e f a c t o r ing , a c c ept a nc es r ec eiv a b l e, a nd g u a r a nt ees r ec eiv a b l e.

3 . L iq u idit y R is k M a na g em ent M ec h a nis m

A. D ef init io n a nd s o u r c es o f l iq u idit y r is k

L iq u idit y r is k o f t h e B a nk a nd it s s u b s idia r ies r ef er s t o t h e r is k o f ina b il it y t o o b t a in f u nds a t a r ea s o na b l e c o s t w it h in a r ea s o na b l e t im ef r a m e t o m eet f ina nc ia l o b l ig a t io ns , a nd t h u s im pa c t t h e B a nk a nd it s s u b s idia r ies ’ pr o f it s o r ec o no m ic v a l u e. L iq u idit y r is k m a y s t em f r o m ext er na l a nd int er na l f a c t o r s , s u c h a s u nder m ined pa y m ent c a pa b il it y c a u s ed b y f ina nc ia l m a r k et v o l a t il it y , ea r l y w it h dr a w s a nd c o nc er ns o f c r edit o r s o r depo s it o r s o v er t h e B a nk ’ s a b il it y t o m eet pa y m ent o b l ig a t io ns du e t o c r edit , m a r k et o r o per a t io na l r is k .

B . O b j ec t iv es o f l iq u idit y r is k m a na g em ent T h er e is c o s t a s s o c ia t ed w it h t h e l ev el o f l iq u idit y . L iq u idit y r is k m a na g em ent f o r t h e B a nk a nd it s s u b s idia r ies a im s t o s a t is f y f u nding needs a nd m a xim iz e pr o f it s b y a l l o c a t ing a s s et s a nd l ia b il it ies in t h e m o s t c o s t ef f ec t iv e w a y w it h in t h e a ppr o v ed r is k t o l er a nc e.

C . M a na g em ent pr o c edu r es a nd r is k m ea s u r em ent o f l iq u idit y r is k B a s ed o n t h e “ As s et a nd L ia b il it y M a na g em ent P o l ic y ” , t h e B a nk a nd it s s u b s idia r ies s et r o b u s t m a na g em ent pr o c edu r es a nd r is k m ea s u r em ent t o ident if y , m ea s u r e, m o nit o r , a nd r epo r t t h e l iq u idit y r is k . B y per io dic a l l y

102


10 2

m o nit o r ing t h e l iq u idit y l im it a ppr o v ed b y t h e B o a r d, c o nt inu o u s l y c o ndu c t ing t h e dev el o pm ent a nd a ppl ic a t io n o f q u a nt it a t iv e r is k a s s es s m ent t o o l s , a nd s t u dy ing l iq u idit y r el a t ed is s u es , t h e l iq u idit y r is k is pr o per l y m a na g ed. T h e B a nk a nd it s s u b s idia r ies s et v a r io u s l im it s f o r m a na g ing l iq u idit y r is k , inc l u ding t h e m is m a t c h o f c a s h inf l o w a nd o u t f l o w a nd f u nding c o nc ent r a t io n t o a s s u r e t h e B a nk a nd it s s u b s idia r ies m a int a in a deq u a t e.

F u nding M a na g em ent U nit is ent r u s t ed t h e r es po ns ib il it y t o c ent r a l l y m a na g e t h e l iq u idit y r is k o f t h e B a nk a nd it s s u b s idia r ies , a nd t o a c t a s s o l e w indo w t o eng a g e in f u nding a c t iv it ies . T h e r is k m a na g em ent u nit w il l m o nit o r t h e l iq u idit y r is k independent l y . T h e m a in r es po ns ib il it ies o f f u nding m a na g em ent u nit a r e a s f o l l o w s : a . K eep a b r ea s t o f m a r k et c o ndit io n/ t r end, a nd a dj u s t l iq u idit y g a p t o

c o nf o r m t o a ppr o v ed r is k l im it s u s ing f ina nc ia l ins t r u m ent s w it h a ppr o pr ia t e a l l o c a t io ns in a m o u nt a nd m a t u r it y .

b . M a int a in a deq u a t e s t o c k o f l iq u id a s s et s t o m eet r eg u l a t o r y r eq u ir em ent s

a nd t o f u l f il l t h e o b l ig a t io ns . c . D iv er s if y f u nding ins t r u m ent s a nd c o u nt er pa r t ies in o r der t o pr ev ent

o v er dependenc e o n s pec if ic f u nding s o u r c es . d. Ac t iv a t e C o nt ing enc y F u nding P l a n ( C F P ) a nd a dj u s t po s it io ns w h en a

l iq u idit y c r is is is det ec t ed. T h e l iq u idit y r is k m o nit o r ing u nit is r es po ns ib l e t o ident if y t h e c a u s e o f l iq u idit y r is k , dev el o p a nd enh a nc e t h e m ea s u r em ent o f r is k , per io dic a l l y c o ndu c t s t h e r is k r epo r t s , a c t iv a t e t h e C o nt ing enc y F u nding P l a n w h en l iq u idit y c r is is is det ec t ed, a nd m o nit o r t h e ef f ec t iv enes s o f a c t io n pl a n. T o o l s a nd c h a r a c t er is t ic s o f r is k m ea s u r em ent s a nd r epo r t ing a r e a s f o l l o w :

( a ) T h o r o u g h l iq u idit y r is k m ea s u r em ent

( A) M a xim u m C u m u l a t iv e O u t f l o w ( M C O ) : Ana l y z ing m a t u r it y m is m a t c h

t o c a pt u r e ea c h t im e b u c k et c a s h f l o w c h a ng es , w h ic h s er v e a s a ea r l y w a r ning o f l iq u idit y r is k .

( B ) L iq u idit y r is k h ea t m a p: L iq u idit y r is k indic a t o r s c a n b e f u r t h er

dev el o ped int o a n ea s il y u nder s t a nda b l e m a p t o f a c il it a t e s y s t em a t ic m o nit o r ing a nd t o ef f ec t iv el y h ig h l ig h t c h a ng es , c a u s es a nd im pa c t .

( b ) T h e l iq u idit y r is k m o nit o r ing u nit per io dic a l l y c o ndu c t s t h e r is k r epo r t s ,

w h ic h c o nt a in t h e a na l y s is o f l im it u s a g e a nd l iq u idit y r is k indic a t o r s . T h e r is k r epo r t w it h s u ppo r t ing s t r es s t es t r es u l t w il l per io dic a l l y b e s u b m it t ed t o r el a t ed r is k m a na g em ent m eet ing s . F o r im po r t a nt l iq u idit y r is k is s u es , depend o n t h e im pa c t , r epo r t t o t h e B a nk o r t h e H o l ding C o m pa ny ’ s m a na g em ent l ev el t o dis c u s s t h e a c t io n pl a n.

103


10 3

D . R is k m it ig a t io n a nd h edg e o f l iq u idit y r is k T h r o u g h l iq u idit y r is k m a na g em ent f r a m ew o r k , t h e B a nk a nd it s s u b s idia r ies m a int a in s u f f ic ient l iq u idit y s t a t u s a nd r o b u s t f u nding s t r u c t u r e. B y u s ing r ig o r o u s l iq u idit y r is k m ea s u r em ent a nd m o nit o r ing , t h e B a nk a nd it s s u b s idia r ies c a n o b s er v e po t ent ia l is s u es o n l iq u idit y r is k a nd r epo r t t h em t o r is k m eet ing . T h er ef o r e, t h e r es po ns ib l e u nit s c a n a dj u s t t h eir s t r a t eg ies b a s ed o n t h e dec is io n t o a v o id l iq u idit y r is k . O nc e t h e r is k l im it is exc eeded, r is k m a na g em ent u nit w il l a na l y z e t h e c a u s e, t h en r epo r t r ea c t io n pl a ns a nd f o l l o w - u ps t o c o r r es po nding a u t h o r it y f o r a ppr o v a l .

I n a ddit io n, t h e B a nk a nd it s s u b s idia r ies h a v e a L iq u idit y C o nt ing enc y P l a n a s g u ida nc e t o a l l u nit s w h en a l iq u idit y c r is is em er g es . I t a im s t o r es o l v e t h e c r is is in a n ef f ec t iv e m a nner b y pu l l ing t o g et h er a l l r es o u r c es a v a il a b l e t o t h e B a nk a nd it s s u b s idia r ies .

104


10 4

E . M a t u r it y a na l y s is o f no n- der iv a t iv es l ia b il it ies T a b l e b el o w s h o w s t h e a na l y s is o f c a s h o u t f l o w s o f no n- der iv a t iv es l ia b il it ies b a s ed o n t im e r em a ining u nt il t h e c o nt r a c t u a l m a t u r it y da t e. T h e a m o u nt dis c l o s ed is b a s ed o n c o nt r a c t u a l c a s h f l o w s a nd m a y b e dif f er ent f r o m t h a t inc l u ded in t h e c o ns o l ida t ed b a l a nc e s h eet s .

December 31, 2015 0~ 30 days 31~ 90 days 91~ 180 days 181days ~ 1year Ov er 1 year Total

D epo s it s f r o m C ent r a l B a nk a nd o t h er b a nk s

$ 3 1 , 21 5 , 1 9 8 8 , 0 9 4 , 5 5 0 2, 8 0 9 , 6 9 3 2, 8 28 , 0 8 3 6 8 6 , 7 5 0 4 5 , 6 3 4 , 27 4

D u e t o C ent r a l B a nk a nd o t h er b a nk s

8 3 2, 7 3 0 1 7 6 , 7 8 9 3 , 9 1 2, 0 6 8 1 1 , 0 4 5 , 5 8 4 3 , 7 6 7 , 8 5 8 1 9 , 7 3 5 , 0 29

N o n- der iv a t i v e f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f i t a nd l o s s

- - - - 3 8 , 6 8 3 , 3 5 5 3 8 , 6 8 3 , 3 5 5

S ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s

4 5 , 25 3 , 23 6 4 , 8 7 7 , 9 4 5 5 1 6 , 9 0 2 - - 5 0 , 6 4 8 , 0 8 3

P a y a b l es 3 7 , 4 4 6 , 8 9 4 7 , 4 28 , 5 8 2 7 , 9 1 0 , 9 8 1 1 4 , 0 4 8 , 20 8 1 0 9 , 3 0 3 , 1 22 1 7 6 , 1 3 7 , 7 8 7 C u r r ent inc o m e t a x

l ia b il it ies - - 2, 9 8 1 , 28 0 - - 2, 9 8 1 , 28 0

D epo s it s a nd r em it t a nc es

1 , 7 28 , 5 8 8 , 6 25 3 26 , 8 3 9 , 5 7 6 20 8 , 7 0 7 , 4 0 3 3 6 7 , 8 27 , 3 0 5 1 0 2, 4 20 , 7 0 2 2, 7 3 4 , 3 8 3 , 6 1 1

F ina nc ia l deb ent u r es - 5 , 0 3 1 , 0 0 0 3 , 1 0 0 , 0 0 0 1 , 7 0 3 , 1 4 0 7 1 , 3 7 7 , 6 1 0 8 1 , 21 1 , 7 5 0 O t h er f ina nc ia l

l ia b il it ies 1 6 , 8 8 4 , 9 25 5 , 8 0 5 , 28 9 4 , 6 24 , 28 8 9 , 0 1 7 , 6 23 1 1 4 , 7 26 , 3 8 5 1 5 1 , 0 5 8 , 5 1 0


D epo s it s f r o m C ent r a l B a nk a nd o t h er b a nk s

$ 4 1 , 7 4 0 , 8 0 3 3 , 4 5 2, 29 3 1 , 7 1 9 , 20 7 3 , 0 22, 1 25 - 4 9 , 9 3 4 , 4 28

D u e t o C ent r a l B a nk a nd o t h er b a nk s

29 3 , 4 5 5 8 , 5 1 2, 9 28 1 0 , 9 6 4 , 4 8 1 26 , 9 1 0 , 5 4 6 7 , 4 0 5 , 7 3 3 5 4 , 0 8 7 , 1 4 3

N o n- der iv a t i v e f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f i t a nd l o s s

- - - - 3 0 , 26 0 , 23 9 3 0 , 26 0 , 23 9

S ec u r it ies s o l d u nder r epu r c h a s e a g r eem ent s

5 7 , 4 9 6 , 9 3 3 2, 1 6 7 , 5 9 9 5 6 6 , 24 4 - - 6 0 , 23 0 , 7 7 6

P a y a b l es 4 5 , 4 22, 6 9 4 1 3 , 1 5 2, 3 7 8 9 , 9 8 3 , 1 4 9 1 5 , 6 9 7 , 21 5 8 0 , 5 7 8 , 5 5 3 1 6 4 , 8 3 3 , 9 8 9 C u r r ent inc o m e t a x

l ia b il it ies - - 3 , 3 9 7 , 3 7 3 - - 3 , 3 9 7 , 3 7 3

D epo s it s a nd r em it t a nc es

1 , 5 0 1 , 9 6 4 , 1 9 5 28 2, 6 6 0 , 3 5 4 1 9 7 , 21 5 , 20 8 3 3 1 , 7 0 4 , 4 8 5 1 0 8 , 3 5 4 , 7 28 2, 4 21 , 8 9 8 , 9 7 0

F ina nc ia l deb ent u r es 26 5 , 1 0 0 1 6 , 1 5 1 , 6 0 8 4 , 0 1 5 , 1 0 0 1 3 , 8 29 , 1 9 0 6 4 , 0 6 7 , 7 5 0 9 8 , 3 28 , 7 4 8 O t h er f ina nc ia l

l ia b il it ies 5 , 7 6 0 , 6 5 1 5 , 3 0 2, 0 7 4 7 , 3 9 5 , 8 5 5 1 0 , 4 6 8 , 9 9 3 1 3 8 , 1 7 0 , 0 7 1 1 6 7 , 0 9 7 , 6 4 4

N o t e: F o r dem a nd depo s it s inc l u ded in “ D epo s it a nd r em it t a nc es , ” t h e

a m o u nt w il l b e dis c l o s ed in t h e ea r l ies t per io d s inc e s u c h depo s it s c a n b e w it h dr a w n a t a ny t im e.

105


10 5

F . M a t u r it y a na l y s is o f der iv a t iv es l ia b il it ies a . N et s et t l ed der iv a t iv es

N et s et t l ed der iv a t iv es eng a g ed b y t h e B a nk a nd it s s u b s idia r ies inc l u de b u t no t l im it ed t o : F o r eig n exc h a ng e der iv a t iv es : no n- del iv er a b l e f o r w a r ds a nd net s et t l ed F X o pt io ns ; I nt er es t r a t e der iv a t iv es : f o r w a r d r a t e a g r eem ent , int er es t r a t e s w a ps , a nd int er es t r a t e f u t u r es ; O t h er der iv a t iv es : eq u it y o pt io ns a nd c o m m o dit y f u t u r es .

F o r der iv a t iv es h el d b y t r a ding pu r po s e, t h e a m o u nt w il l b e dis c l o s ed in t h e ea r l ies t per io d w it h f a ir v a l u e t o r ef l ec t t h e na t u r e o f s h o r t - t er m t r a ding b eh a v io r ; f o r h edg ing der iv a t iv es , t h e a m o u nt dis c l o s ed is b a s ed o n c o nt r a c t u a l c a s h f l o w a nd m a y b e dif f er ent f r o m t h a t inc l u ded in t h e c o ns o l ida t ed b a l a nc e s h eet s . T h e m a t u r it y a na l y s is o f net s et t l ed der iv a t iv es l ia b il it ies is a s f o l l o w s :


D er iv a t i v e f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it a nd l o s s

－ F o r eig n exc h a ng e der iv a t iv es

$ 3 1 , 5 0 6 , 4 8 0 - - - - 3 1 , 5 0 6 , 4 8 0

－ I nt er es t r a t e der iv a t iv es

1 6 , 6 3 7 , 4 3 6 - - - - 1 6 , 6 3 7 , 4 3 6

－ O t h er der iv a t iv es 1 0 5 , 5 5 0 - - - - 1 0 5 , 5 5 0 D er iv a t i v e f ina nc ia l

l ia b il it ies － h edg ing


1 , 4 7 8 , 7 4 9 1 , 9 7 0 , 8 1 3 - - - 3 , 4 4 9 , 5 6 2


20 , 8 5 7 2, 8 8 8 1 9 , 9 3 5 3 2, 4 25 1 3 8 , 6 6 1 21 4 , 7 6 6

T o t a l $ 49,749,072 1,973,701 19,935 32,425 138,661 51,913,794


D er iv a t i v e f ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it a nd l o s s


$ 1 5 , 9 8 5 , 4 9 5 - - - - 1 5 , 9 8 5 , 4 9 5


1 2, 3 8 4 , 6 5 4 - - - - 1 2, 3 8 4 , 6 5 4

－ O t h er der iv a t iv es 9 0 , 1 9 6 - - - - 9 0 , 1 9 6

D er iv a t i v e f ina nc ia l l ia b il it ies － h edg ing


- 2, 21 0 , 9 6 9 1 5 8 , 5 9 0 - - 2, 3 6 9 , 5 5 9


22, 4 8 0 4 2, 1 7 8 26 , 4 0 8 5 2, 1 1 4 3 4 0 , 1 1 2 4 8 3 , 29 2

T o t a l $ 28,482,825 2,253,147 184,998 52,114 340,112 31,313,196

106


10 6

b . G r o s s s et t l ed der iv a t iv es G r o s s s et t l ed der iv a t iv es eng a g ed b y t h e B a nk a nd it s s u b s idia r ies inc l u de: F o r eig n exc h a ng e der iv a t iv es : f o r w a r ds , c u r r enc y s w a ps , c r o s s c u r r enc y s w a ps , a nd g r o s s s et t l ed c u r r enc y o pt io ns . F o r f o r w a r ds , c u r r enc y s w a ps , a nd c r o s s c u r r enc y s w a ps , t h e a m o u nt dis c l o s ed is b a s ed o n c o nt r a c t u a l c a s h f l o w a nd m a y b e dif f er ent f r o m t h a t inc l u ded in t h e c o ns o l ida t ed b a l a nc e s h eet ; f o r g r o s s s et t l ed c u r r enc y o pt io ns , t h e a m o u nt w il l b e dis c l o s ed in t h e ea r l ies t per io d w it h f a ir v a l u e, a s c u r r enc y o pt io ns a r e f o r t r a ding pu r po s e a nd c a n b e dis po s ed a ny t im e. T h e m a t u r it y a na l y s is o f g r o s s s et t l ed der iv a t iv es l ia b il it ies is a s f o l l o w s :


D er iv a t i v e f ina nc ia l I ns t r u m ent s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f i t a nd l o s s


－ C a s h o u t f l o w $ 1 , 20 6 , 6 0 3 , 1 8 7 1 , 1 4 3 , 5 22, 7 3 3 6 3 1 , 3 27 , 0 3 5 5 7 6 , 9 25 , 9 5 5 7 7 , 4 8 9 , 8 1 4 3 , 6 3 5 , 8 6 8 , 7 24 － C a s h inf l o w 1 , 20 4 , 5 1 3 , 1 5 6 1 , 1 4 1 , 5 3 7 , 7 5 4 6 3 1 , 1 5 3 , 4 3 2 5 7 7 , 0 8 9 , 3 21 7 8 , 6 20 , 1 5 1 3 , 6 3 2, 9 1 3 , 8 1 4 D er iv a t i v e f ina nc ia l



－ C a s h o u t f l o w 25 , 9 4 7 , 7 4 8 1 4 , 1 1 2, 4 0 8 - - - 4 0 , 0 6 0 , 1 5 6 － C a s h inf l o w 25 , 7 4 5 , 8 5 8 1 3 , 9 1 9 , 0 5 8 - - - 3 9 , 6 6 4 , 9 1 6 C a s h o u t f l o w s u b t o t a l 1 , 23 2, 5 5 0 , 9 3 5 1 , 1 5 7 , 6 3 5 , 1 4 1 6 3 1 , 3 27 , 0 3 5 5 7 6 , 9 25 , 9 5 5 7 7 , 4 8 9 , 8 1 4 3 , 6 7 5 , 9 28 , 8 8 0 C a s h inf l o w s u b t o t a l 1 , 23 0 , 25 9 , 0 1 4 1 , 1 5 5 , 4 5 6 , 8 1 2 6 3 1 , 1 5 3 , 4 3 2 5 7 7 , 0 8 9 , 3 21 7 8 , 6 20 , 1 5 1 3 , 6 7 2, 5 7 8 , 7 3 0 N et c a s h f l o w $ (2,291,921) (2,178,329) (173,603) 163,366 1,130,337 (3,350,150)


D er iv a t i v e f ina nc ia l I ns t r u m ent s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f i t a nd l o s s


－ C a s h o u t f l o w $ 9 1 7 , 8 4 2, 1 7 8 8 8 0 , 5 24 , 6 9 2 5 0 9 , 9 0 1 , 1 9 9 4 22, 9 0 8 , 0 22 1 0 9 , 1 7 4 , 3 5 5 2, 8 4 0 , 3 5 0 , 4 4 6 － C a s h inf l o w 9 1 4 , 3 4 4 , 8 7 8 8 7 8 , 8 1 6 , 5 5 3 5 1 0 , 1 1 4 , 5 9 8 4 22, 7 4 0 , 6 7 3 1 0 7 , 9 9 3 , 4 5 5 2, 8 3 4 , 0 1 0 , 1 5 7 D er iv a t i v e f ina nc ia l



－ C a s h o u t f l o w 25 , 8 8 7 , 6 5 9 1 4 , 5 8 1 , 3 23 - - - 4 0 , 4 6 8 , 9 8 2 － C a s h inf l o w 25 , 9 9 6 , 9 4 0 1 4 , 9 0 7 , 8 0 3 - - - 4 0 , 9 0 4 , 7 4 3 C a s h o u t f l o w s u b t o t a l 9 4 3 , 7 29 , 8 3 7 8 9 5 , 1 0 6 , 0 1 5 5 0 9 , 9 0 1 , 1 9 9 4 22, 9 0 8 , 0 22 1 0 9 , 1 7 4 , 3 5 5 2, 8 8 0 , 8 1 9 , 4 28 C a s h inf l o w s u b t o t a l 9 4 0 , 3 4 1 , 8 1 8 8 9 3 , 7 24 , 3 5 6 5 1 0 , 1 1 4 , 5 9 8 4 22, 7 4 0 , 6 7 3 1 0 7 , 9 9 3 , 4 5 5 2, 8 7 4 , 9 1 4 , 9 0 0 N et c a s h f l o w $ (3,388,019) (1,381,659) 213,399 (167,349) (1,180,900) (5,904,528)

107


10 7

G . M a t u r it y a na l y s is o f o f f - b a l a nc e- s h eet it em s T a b l e b el o w s h o w s t h e m a t u r it y a na l y s is o f o f f - b a l a nc e- s h eet it em s f o r t h e B a nk a nd it s s u b s idia r ies . T h e a m o u nt o f t h e g u a r a nt ee a nd c o m m it t ed c r edit l ines w il l b e a l l o c a t ed t o t h e ea r l ies t per io d w h en s u c h o b l ig a t io n c a n b e exer c is ed a t a ny t im e b y c l ient s . T h e a m o u nt dis c l o s ed is b a s ed o n c o nt r a c t u a l c a s h f l o w a nd m a y b e dif f er ent f r o m t h a t inc l u ded in t h e c o ns o l ida t ed b a l a nc e s h eet s .


F ina nc ia l g u a r a nt ee c o nt r a c t s

$ 5 8 , 8 9 9 , 8 4 6 - - - - 5 8 , 8 9 9 , 8 4 6

U nu s ed a m o u nt o f ir r ev o c a b l e l o a n c o m m it m ent s

1 4 2, 8 4 7 , 4 7 3 - - - - 1 4 2, 8 4 7 , 4 7 3

U nu s ed a m o u nt o f ir r ev o c a b l e l et t er o f c r edit

1 5 , 6 3 9 , 9 9 2 - - - - 1 5 , 6 3 9 , 9 9 2

U nu s ed a m o u nt o f ir r ev o c a b l e c r edit c a r d c o m m i t m ent s

5 5 1 , 9 0 1 , 9 9 9

- - - - 5 5 1 , 9 0 1 , 9 9 9

T o t a l $ 769,289,310 - - - - 769,289,310


F ina nc ia l g u a r a nt ee c o nt r a c t s

$ 4 6 , 7 3 8 , 8 2 4 - - - - 4 6 , 7 3 8 , 8 24

U nu s ed a m o u nt o f ir r ev o c a b l e l o a n c o m m it m ent s

1 7 2, 9 6 2, 7 4 3 - - - - 1 7 2, 9 6 2, 7 4 3

U nu s ed a m o u nt o f ir r ev o c a b l e l et t er o f c r edit

1 5 , 1 3 8 , 3 7 8 - - - - 1 5 , 1 3 8 , 3 7 8

U nu s ed a m o u nt o f ir r ev o c a b l e c r edit c a r d c o m m i t m ent s

5 23 , 8 4 7 , 1 3 7

- - - - 5 23 , 8 4 7 , 1 3 7

T o t a l $ 758,687,082 - - - - 758,687,082

108


10 8

H . D is c l o s u r es r eq u ir ed b y t h e R eg u l a t io ns G o v er ning t h e P r epa r a t io n o f F ina nc ia l R epo r t s b y P u b l ic B a nk s

a . M a t u r it y a na l y s is o f t h e B a nk ’ s a s s et s a nd l ia b il it ies f o r N ew T a iw a n

D o l l a r s D ec em b er 3 1 , 20 1 5

U nit : I n M il l io ns o f N ew T a iw a n D o l l a r s Amou nt remaining to matu rity date Total 0~ 10 days 11~ 30 days 31~ 90 days 91~ 180 days 181days ~ 1year Ov er 1 year M a j o r c a s h

inf l o w a t m a t u r it y

$ 2, 3 6 6 , 3 7 2 3 3 6 , 6 4 7 28 3 , 4 5 4 29 5 , 3 6 4 1 8 6 , 9 6 2 26 6 , 3 6 7 9 9 7 , 5 7 8

M a j o r c a s h o u t f l o w a t m a t u r it y

2, 6 0 6 , 0 4 5 1 8 5 , 4 9 7 23 2, 4 5 4 4 1 0 , 26 5 3 8 7 , 220 5 4 6 , 3 1 0 8 4 4 , 29 9

G a p ( 23 9 , 6 7 3 ) 1 5 1 , 1 5 0 5 1 , 0 0 0 ( 1 1 4 , 9 0 1 ) ( 20 0 , 25 8 ) ( 27 9 , 9 4 3 ) 1 5 3 , 27 9

D ec em b er 3 1 , 20 1 4 U nit : I n M il l io ns o f N ew T a iw a n D o l l a r s

Amou nt remaining to matu rity date Total 0~ 10 days 11~ 30 days 31~ 90 days 91~ 180 days 181days ~ 1year Ov er 1 year M a j o r c a s h


$ 2, 1 6 9 , 9 4 4 3 6 6 , 3 5 8 3 0 0 , 4 0 8 25 0 , 0 7 2 1 5 1 , 25 8 27 1 , 0 0 8 8 3 0 , 8 4 0


2, 4 8 1 , 28 7 1 9 2, 3 20 229 , 4 7 2 3 8 6 , 8 0 5 3 5 0 , 8 8 5 5 7 4 , 9 9 5 7 4 6 , 8 1 0

G a p ( 3 1 1 , 3 4 3 ) 1 7 4 , 0 3 8 7 0 , 9 3 6 ( 1 3 6 , 7 3 3 ) ( 1 9 9 , 6 27 ) ( 3 0 3 , 9 8 7 ) 8 4 , 0 3 0

N o t e: T h e a b o v e t a b l es r ef er t o t h e B a nk ’ s o v er a l l po s it io n deno m ina t ed

in N T D .

b . M a t u r it y a na l y s is o f t h e B a nk ’ s a s s et s a nd l ia b il it ies f o r U . S . D o l l a r s

D ec em b er 3 1 , 20 1 5 U nit : I n T h o u s a nds o f U . S . D o l l a r s

Amou nt remaining to matu rity date Total 0~ 30 days 31~ 90 days 91~ 180 days 181days ~ 1year Ov er 1 year

M a j o r c a s h inf l o w a t m a t u r it y

$ 7 9 , 3 0 1 , 3 8 5 3 0 , 24 7 , 7 9 8 20 , 6 3 8 , 7 9 8 1 1 , 8 1 5 , 1 3 3 1 0 , 3 5 0 , 5 7 2 6 , 24 9 , 0 8 4


9 2, 26 4 , 7 3 8 3 4 , 6 9 2, 6 8 1 22, 9 3 6 , 3 9 8 1 1 , 5 1 3 , 5 7 9 1 3 , 0 8 0 , 5 28 1 0 , 0 4 1 , 5 5 2

G a p ( 1 2, 9 6 3 , 3 5 3 ) ( 4 , 4 4 4 , 8 8 3 ) ( 2, 29 7 , 6 0 0 ) 3 0 1 , 5 5 4 ( 2, 7 29 , 9 5 6 ) ( 3 , 7 9 2, 4 6 8 )

D ec em b er 3 1 , 20 1 4

U nit : I n T h o u s a nds o f U . S . D o l l a r s Amou nt remaining to matu rity date

Total 0~ 30 days 31~ 90 days 91~ 180 days 181days ~ 1year Ov er 1 year M a j o r c a s h


$ 6 0 , 6 7 8 , 4 6 6 21 , 6 0 3 , 7 5 1 1 7 , 6 26 , 1 0 7 8 , 8 5 0 , 9 6 5 7 , 8 3 3 , 8 9 1 4 , 7 6 3 , 7 5 2


8 0 , 1 3 4 , 1 9 4 29 , 7 8 1 , 7 3 8 1 8 , 8 7 8 , 1 7 1 1 1 , 6 5 7 , 7 5 6 1 1 , 4 1 2, 9 9 2 8 , 4 0 3 , 5 3 7

G a p ( 1 9 , 4 5 5 , 7 28 ) ( 8 , 1 7 7 , 9 8 7 ) ( 1 , 25 2, 0 6 4 ) ( 2, 8 0 6 , 7 9 1 ) ( 3 , 5 7 9 , 1 0 1 ) ( 3 , 6 3 9 , 7 8 5 )

109


10 9

N o t e: T h e a b o v e t a b l es r ef er t o t h e B a nk ’ s o v er a l l po s it io n deno m ina t ed in U S D .

c . M a t u r it y a na l y s is o f t h e B a nk ’ s o v er s ea s b r a nc h es ’ a s s et s a nd l ia b il it ies f o r

U . S . D o l l a r s

D ec em b er 3 1 , 20 1 5

U nit : I n T h o u s a nds o f U . S . D o l l a r s Amou nt remaining to matu rity date

Total 0~ 30 days 31~ 90 days 91~ 180 days 181days ~ 1year Ov er 1 year M a j o r c a s h


$ 3 8 , 7 3 5 , 9 4 6 1 5 , 9 29 , 1 1 3 9 , 8 1 5 , 5 3 2 5 , 0 9 8 , 9 7 7 4 , 8 3 3 , 6 5 9 3 , 0 5 8 , 6 6 5


4 7 , 0 4 4 , 9 7 0 22, 0 26 , 5 3 2 1 2, 0 5 3 , 26 7 4 , 7 4 1 , 0 3 6 4 , 7 7 8 , 0 24 3 , 4 4 6 , 1 1 1

G a p ( 8 , 3 0 9 , 0 24 ) ( 6 , 0 9 7 , 4 1 9 ) ( 2, 23 7 , 7 3 5 ) 3 5 7 , 9 4 1 5 5 , 6 3 5 ( 3 8 7 , 4 4 6 )

D ec em b er 3 1 , 20 1 4

U nit : I n T h o u s a nds o f U . S . D o l l a r s

Amou nt remaining to matu rity date Total 0~ 30 days 31~ 90 days 91~ 180 days 181days ~ 1year Ov er 1 year

M a j o r c a s h inf l o w a t m a t u r it y

$ 23 , 9 3 8 , 8 2 6 9 , 6 0 3 , 3 5 7 5 , 6 0 2, 0 1 7 3 , 1 9 9 , 9 8 6 3 , 1 7 2, 5 7 1 2, 3 6 0 , 8 9 5


3 3 , 4 0 3 , 0 9 9 1 7 , 1 3 9 , 29 0 7 , 25 0 , 9 1 0 3 , 7 29 , 0 3 0 3 , 1 1 3 , 8 8 9 2, 1 6 9 , 9 8 0

G a p ( 9 , 4 6 4 , 27 3 ) ( 7 , 5 3 5 , 9 3 3 ) ( 1 , 6 4 8 , 8 9 3 ) ( 5 29 , 0 4 4 ) 5 8 , 6 8 2 1 9 0 , 9 1 5

( e) T r a ns f er r ed f ina nc ia l a s s et s t h a t a r e no t f u l l y der ec o g niz ed

T h e t r a ns a c t io ns , r el a t ing t o t r a ns f er r ed f ina nc ia l a s s et s no t q u a l if y ing f o r f u l l der ec o g nit io n, t h e B a nk a nd it s s u b s idia r ies c o ndu c t du r ing da il y o per a t io n m o s t l y inv o l v e s ec u r it ies l ending in a c c o r da nc e t o r epu r c h a s e a g r eem ent s . S inc e t h e r ig h t t o r ec eiv e c o nt r a c t u a l c a s h f l o w h a s b een t r a ns f er r ed t o o t h er s a nd t h e B a nk a nd it s s u b s idia r ies ’ o b l ig a t io n t o r epu r c h a s e t h e t r a ns f er r ed a s s et s f o r a f ixed pr ic e a t a f u t u r e da t e is r ec o g niz ed u nder l ia b il it ies , t h e s a id t r a ns f er r ed a s s et s a r e no t f u l l y der ec o g niz ed.

December 31, 2015

Typ es of f inancial as s ets

Carrying amou nt of trans f erred

f inancial as s ets

Carrying amou nt of as s ociated f inancial l iabil ities

Fair v al u e of trans f erred

f inancial as s ets

Fair v al u e of

as s ociated f inancial l iabil ities

Net f air v al u e F ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e


R epu r c h a s e a g r eem ent $ 6 , 3 0 0 , 25 9 6 , 3 1 0 , 29 5 6 , 3 0 0 , 25 9 6 , 3 1 0 , 29 5 ( 1 0 , 0 3 6 ) Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s R epu r c h a s e a g r eem ent 3 4 , 9 3 7 , 5 5 8 4 0 , 222, 0 7 5 3 4 , 9 3 7 , 5 5 8 4 0 , 222, 0 7 5 ( 5 , 28 4 , 5 1 7 ) S ec u r it ies l ending

s eg m ent 25 , 7 7 8 , 8 4 9 1 4 , 24 7 , 6 6 6 25 , 7 7 8 , 8 4 9 1 4 , 24 7 , 6 6 6 1 1 , 5 3 1 , 1 8 3

H el d- t o - m a t u r it y f ina nc ia l a s s et s R epu r c h a s e a g r eem en 4 , 0 3 5 , 6 4 3 4 , 1 1 5 , 7 1 3 4 , 23 5 , 7 23 4 , 1 1 5 , 7 1 3 1 20 , 0 1 0

110


110

( f ) O f f s et t ing f ina nc ia l a s s et s a nd f ina nc ia l l ia b il it ies

T h e B a nk a nd it s s u b s idia r ies h a v e a n exer c is a b l e m a s t er net t ing a r r a ng em ent o r s im il a r a g r eem ent in pl a c e w it h c o u nt er pa r t ies . W h en b o t h pa r t ies r ea c h a c o ns ens u s r eg a r ding net s et t l em ent , t h e a f o r es a id exer c is a b l e m a s t er net t ing a r r a ng em ent o r s im il a r a g r eem ent c a n b e net s et t l ed b y o f f s et t ing f ina nc ia l a s s et s a nd f ina nc ia l l ia b il it ies . I f no t , t h e t r a ns a c t io n c a n b e s et t l ed a t t h e t o t a l a m o u nt . I n t h e ev ent o f def a u l t inv o l v ing o ne o f t h e pa r t ies , t h e o t h er pa r t y c a n h a v e t h e t r a ns a c t io n net s et t l ed.

T h e f o l l o w ing t a b l es pr es ent t h e a f o r em ent io ned o f f s et t ing f ina nc ia l a s s et s a nd f ina nc ia l l ia b il it ies .

December 31, 2015 Financial as s ets that are of f s et, hav e an ex ercis abl e mas ter netting arrangement or s imil ar agreement

G ros s amou nts of recogniz ed

f inancial as s ets (a)

G ros s amou nts of

f inancial l iabil ities

of f s et in the bal ance s heet (b)

Net amou nt of f inancial

as s ets p res ented in the bal ance

s heet (c)= (a)- (b)

Amou nts not of f s et in the

bal ance s heet (d)

Financial ins tru ments

(Note)

Cas h col l ateral receiv ed

Net amou nt (e)= (c)- (d)

D er iv a t i v e f ina nc ia l a s s et s $ 81,213,038 - 81,213,038 41,504,479 714,887 38,993,672

December 31, 2015 Financial l iabil ities that are of f s et, hav e an ex ercis abl e mas ter netting arrangement or s imil ar agreement


f inancial l iabil ities (a)

G ros s amou nts of

f inancial as s ets of f s et

in the bal ance s heet (b)

Net amou nt of f inancial l iabil ities

p res ented in the bal ance


Amou nts not of f s et in the bal ance s heet (d)


(Note)

Cas h col l ateral p l edged


D er iv a t i v e f ina nc ia l l ia b il it ies $ 8 9 , 3 5 0 , 6 5 1 - 8 9 , 3 5 0 , 6 5 1 3 3 , 220 , 8 9 0 24 , 5 1 4 , 4 1 2 3 1 , 6 1 5 , 3 4 9 S ec u r it ies l ending s eg m ent 1 4 , 24 7 , 6 6 6 - 1 4 , 24 7 , 6 6 6 1 4 , 24 7 , 6 6 6 - - R epu r c h a s e a g r eem ent 5 0 , 6 4 8 , 0 8 3 - 5 0 , 6 4 8 , 0 8 3 6 , 9 6 7 , 6 3 5 - 4 3 , 6 8 0 , 4 4 8 T o t a l $ 154,246,400 - 154,246,400 54,436,191 24,514,412 75,295,797

December 31, 2014 Financial as s ets that are of f s et, hav e an ex ercis abl e mas ter netting arrangement or s imil ar agreement


f inancial as s ets (a)

G ros s amou nts of

f inancial l iabil ities

of f s et in the bal ance s heet (b)

Net amou nt of f inancial

as s ets p res ented in the bal ance



bal ance s heet (d)


(Note)

Cas h col l ateral receiv ed


D er iv a t i v e f ina nc ia l a s s et s $ 59,209,206 - 59,209,206 34,496,743 767,893 23,944,570

December 31, 2014 Financial l iabil ities that are of f s et, hav e an ex ercis abl e mas ter netting arrangement or s imil ar agreement


f inancial l iabil ities (a)

G ros s amou nts of

f inancial as s ets of f s et

in the bal ance s heet (b)

Net amou nt of f inancial l iabil ities

p res ented in the bal ance



bal ance s heet (d)


(Note)

Cas h col l ateral p l edged


D er iv a t i v e f ina nc ia l l ia b il it ies $ 6 3 , 4 7 2, 3 3 0 - 6 3 , 4 7 2, 3 3 0 23 , 7 9 0 , 0 0 2 1 4 , 5 8 5 , 9 4 1 26 , 0 9 6 , 3 8 7 S ec u r it ies l ending s eg m ent 3 0 , 6 7 1 , 1 9 3 - 3 0 , 6 7 1 , 1 9 3 3 0 , 6 7 1 , 1 9 3 - - T o t a l $ 94,143,523 - 94,143,523 54,461,195 14,585,941 26,096,387

N o t e M a s t er net t ing a r r a ng em ent s a nd no n- c a s h f ina nc ia l c o l l a t er a l s a r e inc l u ded.

111


111

( g ) C a pit a l m a na g em ent

1 . C a pit a l m a na g em ent g o a l a nd pr o c edu r e T h e g o a l o f t h e B a nk ’ s c a pit a l m a na g em ent is t o m eet t h e r eg u l a t o r y r eq u ir em ent o n c a pit a l a deq u a c y a nd t h e o r g a niz a t io n’ s t a r g et o f m a xim iz ing r et u r ns f o r s h a r eh o l der s b y f o l l o w ing c a pit a l m a na g em ent pr o c edu r es a nd r a is ing r et u r n o n c a pit a l . T h e B a nk ’ s c a pit a l pl a nning a c c o u nt s f o r s h o r t - t er m a nd l o ng - t er m c a pit a l r eq u ir em ent s . T h e B a nk m a k es y ea r l y c a pit a l pl a nning b a s ed o n o per a t io n pl a nning , int er na l pl a nned r ef er enc e index, c u r r ent a nd f o r ec a s t f u t u r e c a pit a l r eq u ir em ent , a nd pr o m is ed r et u r ns f o r s h a r eh o l der s . T h e B a nk a l s o h a s a b a c k - u p pl a n t o m eet c a pit a l r eq u ir em ent no t inc l u ded in t h e pl a nning . T h e B a nk a l s o r eg u l a r l y c o ndu c t s s t r es s t es t s a nd s c ena r io s im u l a t io n a na l y s es t o c a l c u l a t e dif f er ent c a pit a l r a t io s , f u l l y t a k ing int o a c c o u nt ext er na l c o ndit io ns a nd o t h er f a c t o r s , inc l u ding po t ent ia l r is k s , c h a ng es in f ina nc ia l m a r k et s , a nd o t h er ev ent s im pa c t ing r is k t a k ing c a pa b il it ies , t o m a k e s u r e t h a t t h e B a nk c a n m a int a in a deq u a t e c a pit a l in c a s e o f det r im ent a l ev ent s a nd h u g e m a r k et c h a ng es . P l a nning f o r y ea r l y ea r ning s dis t r ib u t io n f o l l o w s t h e pr inc ipl es a nd a r a t io m a nda t ed b y t h e a r t ic l es o f inc o r po r a t io n a nd div idend po l ic y , a nd is pu t int o ef f ec t a f t er b eing a ppr o v ed b y t h e b o a r d o f dir ec t o r s o n b eh a l f o f t h e s h a r eh o l der s ’ . C a pit a l a deq u a c y , po t ent ia l inv es t m ent needs , a nd div idend a m o u nt o f pr ev io u s y ea r s a r e t a k en int o a c c o u nt . T h e needs t o m a int a in pr o per f ina nc ia l r a t io s a nd s a t is f y c a pit a l r eq u ir em ent o f t h e pa r ent c o m pa ny a r e a l s o pr ec o ndit io ns o f t h e dis t r ib u t io n.

2. D ef init io n a nd r eg u l a t io n T h e r eg u l a t o r o f t h e B a nk is t h e F S C o f t h e R epu b l ic o f C h ina , a nd t h e B a nk f o l l o w s t h e “ R eg u l a t io ns G o v er ning t h e C a pit a l Adeq u a c y a nd C a pit a l C a t eg o r y o f B a nk s ” is s u ed b y t h e F S C . S t a r t ing f r o m J a nu a r y 1 , 20 1 3 , a c c o r ding t o t h e r eg u l a t io ns a f o r em ent io ned, t h e r a t io o f r eg u l a t o r y c a pit a l t o r is k - w eig h t ed a s s et s s h a l l m ea n c o m m o n eq u it y r a t io , T ier 1 C a pit a l r a t io , a nd t o t a l c a pit a l a deq u a c y r a t io . B es ides c a l c u l a t ing t h es e t h r ee r a t io s o f t h e B a nk , it s h o u l d a l s o c a l c u l a t e t h e c o ns o l ida t ed c o m m o n eq u it y r a t io , T ier 1 C a pit a l r a t io , a nd t o t a l c a pit a l a deq u a c y r a t io b y c o ns o l ida t ing it s inv es t m ent s in s u b s idia r ies in c o ns o l ida t ed f ina nc ia l s t a t em ent s pr epa r ed in a c c o r da nc e w it h I AS 27 , a nd t h e t h r ee c o ns o l ida t ed r a t io s s h o u l d f o l l o w a r t ic l e 5 o f t h e “ R eg u l a t io ns G o v er ning t h e C a pit a l Adeq u a c y a nd C a pit a l C a t eg o r y o f B a nk s ” .

3 . R eg u l a t o r y c a pit a l

T h e B a nk ’ s r eg u l a t o r y c a pit a l is div ided int o net T ier 1 C a pit a l a nd net T ier 2 C a pit a l f o l l o w ing t h e “ R eg u l a t io ns G o v er ning t h e C a pit a l Adeq u a c y a nd C a pit a l C a t eg o r y o f B a nk s ” :

112


112

A. N et T ier 1 C a pit a l : T h e a g g r eg a t e a m o u nt o f net C o m m o n E q u it y T ier 1 a nd net a ddit io na l T ier 1 C a pit a l . － N et c o m m o n eq u it y T ier 1 C a pit a l : P r im a r il y c o ns is t s o f t h e a g g r eg a t e

a m o u nt o f C o m m o n s t o c k a nd a ddit io na l pa id- in c a pit a l in exc es s o f pa r - c o m m o n s t o c k , C a pit a l c o l l ec t ed in a dv a nc e, C a pit a l r es er v es , S t a t u t o r y s u r pl u s r es er v es , S pec ia l r es er v es , a c c u m u l a t ed pr o f it o r l o s s , N o n- c o nt r o l l ing int er es t s , a nd O t h er eq u it y int er es t it em s , m inu s int a ng ib l e a s s et s ( inc l u ding g o o dw il l ) , def er r ed t a x a s s et s du e t o l o s s es f r o m t h e pr ev io u s y ea r , t h e ins u f f ic ienc y o f o per a t io n r es er v es a nd l o a n l o s s pr o v is io ns , t h e r ev a l u a t io n s u r pl u s o f r ea l es t a t e, u na m o r t iz ed l o s s es o n s a l es o f no n- per f o r m ing l o a ns , a nd s t a t u t o r y a dj u s t m ent it em s c a l c u l a t ed in a c c o r da nc e w it h “ t h e M et h o ds f o r C a l c u l a t ing B a nk ’ s R eg u l a t o r y C a pit a l a nd R is k W eig h t ed As s et s ” .

－ N et a ddit io na l T ier 1 C a pit a l : C o ns is t s o f t h e a g g r eg a t e a m o u nt o f

no n- c u m u l a t iv e per pet u a l pr ef er r ed s t o c k a nd it s c a pit a l s t o c k pr em iu m , no n- c u m u l a t iv e per pet u a l s u b o r dina t ed deb t s , a ddit io na l T ier 1 C a pit a l is s u ed b y t h e B a nk ’ s s u b s idia r ies a nd no t dir ec t l y o r indir ec t l y h el d b y t h e B a nk , m inu s s t a t u t o r y a dj u s t m ent it em s c a l c u l a t ed in a c c o r da nc e w it h “ t h e M et h o ds f o r C a l c u l a t ing B a nk ’ s R eg u l a t o r y C a pit a l a nd R is k W eig h t ed As s et s . ”

B . N et T ier 2 C a pit a l : C o ns is t s o f t h e a g g r eg a t e a m o u nt o f c u m u l a t iv e per pet u a l

pr ef er r ed s t o c k a nd it s c a pit a l s t o c k pr em iu m , c u m u l a t iv e per pet u a l s u b o r dina t ed deb t s , c o nv er t ib l e s u b o r dina t ed deb t s , l o ng - t er m s u b o r dina t ed deb t s , no n- per pet u a l pr ef er r ed s t o c k a nd it s c a pit a l s t o c k pr em iu m ; t h e inc r ea s e in r et a ined ea r ning s w h en f a ir v a l u e o r r e- es t im a t ed v a l u e is a do pt ed a s deem ed c o s t f o r t h e f ir s t - t im e a do pt io n o f I F R S s o n pr em is es , 4 5 % o f u nr ea l iz ed g a ins o n c h a ng es in t h e f a ir v a l u e o f inv es t m ent pr o per t ies u s ing f a ir v a l u e m et h o d, a s w el l a s t h e 4 5 % o f u nr ea l iz ed g a ins o n a v a il a b l e- f o r - s a l e f ina nc ia l a s s et s , o per a t io na l r es er v es a nd l o a n- l o s s pr o v is io ns , a nd T ier 2 C a pit a l is s u ed b y t h e B a nk ’ s s u b s idia r ies a nd no t dir ec t l y o r indir ec t l y h el d b y t h e B a nk , m inu s s t a t u t o r y a dj u s t m ent it em s c a l c u l a t ed in a c c o r da nc e w it h “ t h e M et h o ds f o r C a l c u l a t ing B a nk ’ s R eg u l a t o r y C a pit a l a nd R is k W eig h t ed As s et s . ” T h e B a nk is s u es dif f er ent c a pit a l ins t r u m ent s v ia v er s a t il e v enu es t o m a int a in a s o u nd c a pit a l s t r u c t u r e. T h e B a nk do es no t pr o v ide h o l der s o f s u c h c a pit a l ins t r u m ent s w it h r el ev a nt f ina nc ing . S u b s idia r ies o f t h e f ina nc ia l h o l ding c o m pa ny , t o w h ic h t h e B a nk b el o ng s , do no t o w n s u c h c a pit a l ins t r u m ent s .

T h e r eg u l a t o r exa m ines a B a nk ’ s c a pit a l c a t eg o r y in a c c o r da nc e w it h t h e c o m m o n eq u it y r a t io , T ier 1 C a pit a l r a t io , a nd t o t a l c a pit a l a deq u a c y r a t io f il ing b y t h e B a nk . W h en t h e B a nk ’ s c a pit a l is g r a ded a s ina deq u a t e c a pit a l , s ig nif ic a nt l y ina deq u a t e c a pit a l o r s er io u s l y ina deq u a t e c a pit a l b y t h e r eg u l a t o r , t h e r eg u l a t o r s h a l l t a k e pr o m pt c o r r ec t iv e a c t io ns pu r s u a nt t o S ec t io ns 1 t o 3 , P a r a g r a ph 1 , Ar t ic l e 4 4 - 2 o f t h e B a nk ing Ac t .

113


113

T h e a f o r em ent io ned r eg u l a t io ns g o v er ning c a t eg o r ies is s u ed b y t h e r eg u l a t o r f o l l o w s t h e new B AS E L c a pit a l a g r eem ent is s u ed b y B a nk f o r I nt er na t io na l S et t l em ent s . A b r ief des c r ipt io n o f t h r ee pil l a r s o f t h e a g r eem ent a nd t h e B a nk ’ s c o m pl ia nc e w it h t h em is a s b el o w : A. P il l a r 1

P il l a r 1 c o v er s t h e c a pit a l r eq u ir em ent f o r c r edit r is k , m a r k et r is k , a nd o per a t io na l r is k . a . C r edit r is k m ea s u r es t h e r is k t h a t a b a nk s u f f er s l o s s es w h en l o a n

c l ient s , g u a r a nt o r s o r c o u nt er pa r t ies b r ea c h a g r eem ent s , a nd c a n b e div ided int o o n/ o f f - b a l a nc e- s h eet it em s . M ea s u r em ent m et h o ds inc l u de

s t a nda r diz ed a ppr o a c h a nd int er na l r a t ing s - b a s ed ( I R B ) a ppr o a c h es . T h e B a nk a do pt s s t a nda r diz ed a ppr o a c h in t h e c a l c u l a t io n o f r eq u ir ed c a pit a l .

b . M a r k et r is k s t ir s neg a t iv e im pa c t o n a b a nk ’ s o v er a l l r ev enu e, c a pit a l ,

v a l u e o r o per a t ing c a pa c it y du e t o c h a ng es in int er es t r a t es ( inc l u ding c r edit s pr ea d r is k ) , f o r eig n exc h a ng e r a t e, s ec u r it ies pr ic es , c o m m o dit ies pr ic es a nd it s v o l a t il it y , c o r r el a t io n int er a c t io n, m a r k et l iq u idit y a nd o t h er m a r k et r is k f a c t o r s . M a r k et r is k c a pit a l a c c r u a l m et h o ds inc l u de s t a nda r diz ed a ppr o a c h a nd int er na l m o del a ppr o a c h . T h e B a nk a do pt s s t a nda r diz ed a ppr o a c h in t h e c a l c u l a t io n o f r eq u ir ed c a pit a l .

c . O per a t io na l r is k is t h e r is k t h a t a b a nk s u f f er s l o s s es f r o m ext er na l

ev ent s o r im pr o pr iet ies o r f a il u r es o f it s int er na l o per a t io n, per s o nnel , o r s y s t em s , inc l u ding l eg a l r is k , b u t exc l u ding s t r a t eg ic a nd r epu t a t io na l r is k . M et h o ds t o m ea s u r e c a pit a l r eq u ir ed f o r o per a t io na l r is k inc l u de b a s ic indic a t o r a ppr o a c h ( B I A) , s t a nda r diz ed a ppr o a c h ( S A) ; a l t er na t iv e s t a nda r diz ed a ppr o a c h es ( AS A) , a nd a dv a nc ed m ea s u r em ent a ppr o a c h es ( AM A) . T h e B a nk a do pt s s t a nda r diz ed a ppr o a c h in div iding t h e g r o s s pr o f it s int o eig h t b u s ines s l ines , a nd c a l c u l a t ing r eq u ir ed c a pit a l f o r ea c h b u s ines s l ine’ s o per a t io na l r is k b a s ed o n t h eir r es pec t iv e r is k q u o t ient .

B . P il l a r 2

P il l a r 2 ens u r es t h a t ea c h b a nk h a s a s o u nd int er na l a s s es s m ent pr o c es s a nd is a b l e t o f o r ec a s t it s c a pit a l a deq u a c y b a s ed o n t h e t h o r o u g h a s s es s m ent o f b a nk r is k s , a nd t h a t , w it h pr o per r eg u l a r m o nit o r ing , r eg u l a t o r y c a pit a l m a t c h es t h e o v er a l l r is k c h a r a c t er s . F o r c o m pl ia nc e w it h r eg u l a t o r y m o nit o r ing o f c a pit a l a deq u a c y , t h e B a nk c o ndu c t s r eg u l a r f il ing o f c a pit a l a deq u a c y s el f - a s s es s m ent a nd v a r io u s r is k s m a na g em ent ev er y y ea r in a c c o r da nc e w it h r eg u l a t o r y m a nda t e.

114


114

C . P il l a r 3 P il l a r 3 inv o l v es m a r k et dis c ipl ine a nd r eq u ir es b a nk s t o f o l l o w new B AS E L c a pit a l a g r eem ent f r a m ew o r k b y dis c l o s ing m o r e det a il ed inf o r m a t io n o n r is k , c a pit a l , a nd r is k m a na g em ent , t o im pr o v e b a nk ing inf o r m a t io n t r a ns pa r enc y . T o b e in c o m pl ia nc e w it h t h e pil l a r 3 m a r k et dis c ipl ine pr inc ipl e, t h e B a nk h a s o n it s w eb s it e a pa g e “ c a pit a l a deq u a c y a nd r is k m a na g em ent ” dedic a t ed t o dis c l o s u r e o f q u a l it a t iv e a nd q u a nt it a t iv e inf o r m a t io n.

4 . C a pit a l a deq u a c y r a t io s o f t h e B a nk a nd it s s u b s idia r ies

P eriod Anal yz ed items December 31, 2015

December 31, 2014 (Note)

C o m m o n eq u it y c a pit a l 21 1 , 6 5 5 , 0 0 3 1 8 0 , 1 4 4 , 3 4 7R eg u l a t o r y O t h er T ier 1 c a pit a l 3 1 , 225 , 8 4 8 28 , 8 25 , 7 9 1c a pit a l T ier 2 c a pit a l 4 3 , 20 0 , 3 9 8 5 6 , 3 29 , 6 20 R eg u l a t o r y c a pit a l 28 6 , 0 8 1 , 24 9 26 5 , 29 9 , 7 5 8 S t a nda r diz ed a ppr o a c h ( S A) 1 , 9 1 3 , 3 22, 3 0 9 1 , 6 8 6 , 4 5 1 , 0 5 5

C r edit r is k

I nt er na l r a t ing s - b a s ed ( I R B ) a ppr o a c h

- -

As s et s s ec u r iz a t io n 8 1 , 3 5 0 , 7 8 4 7 3 , 1 4 8 , 3 5 8 B a s ic indic a t o r a ppr o a c h ( B I A) - -

R is k - w eig h t ed O per a t io na l r is k

S t a nda r dis ed a ppr o a c h ( S A) / Al t er na t iv e S t a nda r dis ed a ppr o a c h es ( AS A)

1 3 2, 8 1 7 , 6 9 1 1 23 , 1 4 8 , 1 5 4

a s s et s Adv a nc ed m ea s u r em ent a ppr o a c h es ( AM A)

- -

M a r k et r is k

S t a nda r dis ed a ppr o a c h ( S A) 7 5 , 6 8 2, 23 7 8 8 , 7 0 7 , 9 5 6 I nt er na l m o del a ppr o a c h - - T o t a l a m o u nt o f r is k w eig h t ed a s s et s 2, 20 3 , 1 7 3 , 0 21 1 , 9 7 1 , 4 5 5 , 5 23C a pit a l a deq u a c y r a t io 1 2. 9 8 % 1 3 . 4 6 %R a t io o f c o m m o n eq u it y t o r is k w eig h t ed a s s et s ( % ) 9 . 6 1 % 9 . 1 4 %R a t io o f t ier 1 c a pit a l t o r is k w eig h t ed a s s et s ( % ) 1 1 . 0 2% 1 0 . 6 0 %L ev er a g e r a t io 6 . 4 6 % 4 . 5 3 %

N o t e: T h e B a nk ’ s c o ns o l ida t ed c a pit a l a deq u a c y r a t io inc l u des t o t a l a m o u nt o f r is k

w eig h t ed a s s et s f r o m T h e T o k y o S t a r B a nk , L t d. , w h ic h is t h e B a nk ’ s s u b s idia r y in J a pa n. T h e a f o r em ent io ned t o t a l a m o u nt is c o m pu t ed in c o m pl ia nc e w it h t h e B AS E L I I I r el a t ed r eg u l a t io ns a ppr o v ed b y t h e a u t h o r it ies o f b a nk ing s ec t o r in J a pa n.

115


115

( AP ) S t r u c t u r ed ent it ies t h a t a r e no t inc l u ded in c o ns o l ida t ed f ina nc ia l r epo r t s

( a ) T h e t a b l e b el o w pr es ent s t h e t y pes o f s t r u c t u r ed ent it ies t h a t t h e B a nk a nd it s s u b s idia r ies do no t inc l u de in c o ns o l ida t ed f ina nc ia l r epo r t s b u t in w h ic h t h ey h o l d a n int er es t .

The typ es of s tru ctu red entities

Natu re and p u rp os e

Interes ts hel d by the Bank and its s u bs idiaries

As s et B a c k ed S ec u r it ies S ec u r it iz ing f ina nc ia l o r no n- f ina nc ia l a s s et s a nd is s u ing t h em t o r a is e f u nds .

I nv es t ing o r l ending in s ec u r it ies is s u ed b y t h es e ent it ies .

P r iv a t e f u nd R a is ing f u nds t o c r ea t e inv es t m ent o ppo r t u nit ies in a v a r iet y o f a s s et s .

I nv es t ing in f u nds is s u ed b y t h es e ent it ies .

( b ) T h e s c a l es o f s t r u c t u r ed ent it ies no t inc l u ded in c o ns o l ida t ed f ina nc ia l r epo r t s a s o f

D ec em b er 3 1 , 20 1 5 a r e a s f o l l o w s . December 31,

2015 As s et B a c k ed S ec u r it ies $ 1 7 4 , 3 7 7 , 20 5 , 9 3 2 P r iv a t e f u nd 1 , 4 20 , 7 3 9 , 8 0 7

( c ) T h e c a r r y ing a m o u nt s o f int er es t s h el d b y t h e B a nk a nd it s s u b s idia r ies in t h es e s t r u c t u r ed ent it ies a s o f D ec em b er 3 1 , 20 1 5 a r e a s f o l l o w s .

As s ets hel d by the Bank and its s u bs idiaries December 31,

2015 Av a il a b l e- f o r - s a l e f ina nc ia l a s s et s －net $ 23 , 7 6 4 , 7 1 0 L o a ns －net 1 , 6 5 2, 7 1 9 H el d- t o - m a t u r it y f ina nc ia l a s s et s －net 1 3 3 , 8 4 6 O t h er f ina nc ia l a s s et s －net 22, 28 2 O t h er a s s et s －net 3 9 4 , 7 1 6 Total as s ets hel d by the Bank and its s u bs idiaries $ 25,968,273

Liabil ities hel d by the Bank and its s u bs idiaries December 31,

2015 D epo s it s a nd r em it t a nc es $ 7,212

T h e m a xim u m a m o u nt o f r is k expo s u r e t h e B a nk a nd it s s u b s idia r ies endu r e t o a l o s s inc u r r ed f r o m s pec ia l pu r po s e ent it ies t h a t a r e no t inc l u ded in c o ns o l ida t ed f ina nc ia l r epo r t s is t h e c a r r y ing a m o u nt o f int er es t s h el d b y t h e B a nk a nd it s s u b s idia r ies .

( d) As o f D ec em b er 3 1 , 20 1 5 , t h e B a nk a nd it s s u b s idia r ies h a v e no t pr o v ided a ny f ina nc ia l s u ppo r t t o t h eir s pec ia l pu r po s e ent it ies t h a t a r e no t inc l u ded in c o ns o l ida t ed f ina nc ia l r epo r t s .

116


116

7. RELATED- P ARTY TRANSACTIONS

( A) N a m es o f r el a t ed pa r t ies a nd r el a t io ns h ip w it h t h e B a nk

Name of rel ated p arty Rel ations hip w ith the Bank C T B C F ina nc ia l H o l ding C o . , L t d. P a r ent c o m pa ny o f t h e B a nk . G r a nd B il l s F ina nc e C o r po r a t io n I nv es t ee c o m pa ny u nder eq u it y m et h o d G C B F ina nc e ( H K ) L im it ed 〃

( L iq u ida t ed in 20 1 5 ) T a iw a n I ns t it u t e o f E c o no m ic R es ea r c h T h e B a nk c o nt r ib u t ed o v er 1 / 3 o f it s t o t a l f u nds . C T B C C h a r it y F o u nda t io n 〃 C T B C C u l t u r e F o u nda t io n 〃 C T B C F ina nc ia l M a na g em ent C o l l eg e T h e C h a ir m a n o f t h e B a nk ’ s s u b s idia r y is it s dir ec t o r . I m po r t er a nd E xpo r t er As s o c ia t io n o f T a ipei T h e dir ec t o r o f t h e B a nk is it s r epr es ent a t iv e. S h o w a D enk o H d T r a c e C o r p. T h e C h a ir m a n o f t h e B a nk is it s dir ec t o r . S t r a it s E xc h a ng e F o u nda t io n T h e C h a ir m a n o f t h e B a nk is it s r epr es ent a t iv e. C T B C S ec u r it ies C o . , L t d. C o nt r o l l ed b y t h e s a m e c o m pa ny a s t h e B a nk . C T B C ( M a u r it iu s ) H o l ding C o . , L t d. 〃 C T B C As ia L im it ed 〃 C T B C S ec u r it ies I nv es t m ent S er v ic e C o . , L t d. 〃 C T B C V ent u r e C a pit a l C o . , L t d. 〃 C T B C As s et M a na g em ent C o . , L t d. 〃 C T B C S ec u r it y C o . , L t d. 〃 T a iw a n L o t t er y C o . , L t d. 〃 C T B C L if e I ns u r a nc e C o . , L t d. 〃 C T B C I nv es t m ent s C o . , L t d. 〃 T a iw a n L if e I ns u r a nc e C o . , L t d. 〃 T L G C a pit a l C o . , L t d 〃 T L G I ns u r a nc e C o . , L t d. 〃 C T B C V ent u r e C a pit a l I nv es t m ent M a na g em ent

( S h a ng h a i) C o . , L t d. 〃

C T B C I nt er na t io na l C o . , L im it ed. 〃 C T B C L ea s ing C o . , L t d. 〃 C T B C C a pit a l I nt er na t io na l C o . , L im it ed. 〃 O v er s ea s I nv es t m ent & D ev el o pm ent C o r p. T h e B a nk is it s C h a ir m a n. C h a ng c h i I nv es t m ent s C o . , L t d. T h e dir ec t o r o f t h e pa r ent c o m pa ny . W ei F u I nv es t m ent C o . , L t d. 〃 W eih u ng I nv es t m ent C o . , L t d. T h e C h a ir m a n o f t h e pa r ent c o m pa ny o f t h e B a nk is

it s dir ec t o r . H ew ei I nv es t m ent C o . , L t d. 〃 S u ng h u ng I nv es t m ent C o . , L t d. 〃 F eng l u D ev el o pm ent & I nv es t m ent C o . , L t d. 〃 T a iw a n S po r t s L o t t er y C o . , L t d. T h e c o m pa ny ’ s C h a ir m a n is t h e s ec o nd- deg r ee

r el a t iv e o f t h e C h a ir m a n o f t h e B a nk ’ s pa r ent c o m pa ny .

Q u a nw ei I nv es t m ent L im it ed 〃 L a ndr ic h I nt er na t io na l L t d. T h e s ec o nd- deg r ee r el a t iv es o f t h e C h a ir m a n o f t h e

B a nk ’ s pa r ent c o m pa ny h a v e s u b s t a nt iv e c o nt r o l ( indir ec t ) o v er t h e C o m pa ny .

K a ina n H ig h S c h o o l o f C o m m er c e a nd I ndu s t r y T h e C h a ir m a n o f t h e pa r ent c o m pa ny o f t h e B a nk is it s b o dy c o r po r a t e r epr es ent a t iv e.

K inpo E l ec t r o nic s , I nc . T h e C h a ir m a n o f t h e B a nk ’ s s u b s idia r y is it s dir ec t o r .

117


117

Name of rel ated p arty Rel ations hip w ith the Bank T a ipei F ina nc ia l C ent er C o r po r a t io n T h e C h a ir m a n o f t h e c o m pa ny w h ic h is c o nt r o l l ed b y

t h e s a m e pa r ent c o m pa ny a s t h e B a nk is it s dir ec t o r .

C o l l a m a t r ix C o . , L t d. 〃 T a is h in I nt er na t io na l B a nk 〃 N a n Y a P l a s t ic s C o r po r a t io n 〃 F o r m o s a S u m c o T ec h no l o g y C o r po r a t io n 〃 T a iw a n R el o C l u b , l im it ed 〃 N a n Y a T ec h no l o g y C o r po r a t io n 〃 B r o t h er s E nt er t a ining C o . , L t d 〃 H o - Y eh I nv es t m ent C o . , L t d T h e C h a ir m a n o f t h e c o m pa ny w h ic h is c o nt r o l l ed b y

t h e s a m e pa r ent c o m pa ny a s t h e B a nk is it s C h a ir m a n.

Ac a c ia C o m pa ny T h e dir ec t o r o f t h e c o m pa ny w h ic h is c o nt r o l l ed b y t h e s a m e pa r ent c o m pa ny a s t h e B a nk is it s C h a ir m a n.

N a t io na l C r edit C a r d C ent er o f R . O . C . 〃 Ab ic o As ia C a pit a l C o . , L t d. T h e G ener a l M a na g er o f t h e c o m pa ny w h ic h is

c o nt r o l l ed b y t h e s a m e pa r ent c o m pa ny a s t h e B a nk is it s dir ec t o r .

T h e T h ir d W ednes da y C l u b T h e C h a ir m a n o f t h e B a nk ’ s s u b s idia r y is it s r epr es ent a t iv e.

H u a k u D ev el o pm ent C o . , L t d. T h e c o m pa ny ’ s G ener a l M a na g er is t h e s ec o nd- deg r ee r el a t iv e o f t h e dir ec t o r .

C h a il ea s e F ina nc e C o . , L t d. R el a t ed pa r t y in s u b s t a nc e. S u ng y o ng I nv es t m ent C o . , L t d. 〃 S u ng b o C o . , L t d. 〃 J u ng g u a n I nv es t m ent C o . , L t d. 〃 K u a n H o D ev el o pm ent C o . , L t d. 〃 Z h o ng h a ng C o . , L t d. 〃 C h a il ea s e R es o u r c es T ec h no l o g y C o . L t d 〃 W ei C h u a ng I nf o r m a t io n C o . , L t d. 〃 B o s s er D es ig n I nc . 〃 C T C G r o u p I nc . 〃 C h a il ea s e I nt er na t io na l L ea s ing C o . , L t d.

( V iet na m ) . 〃

C h u ng C h eng I nv es t m ent C o . , L t d. 〃 L ea n D ev T ec h no l o g y C o . , L t d. 〃 AP E X C r edit S o l u t io ns I nc . 〃 M y L ea s ing ( M a u r it iu s ) C o r p. 〃 H u - Y i S o l u t io n C o r p. ( S h a ng h a i) 〃 ( N o t e)

( L iq u ida t ed in 20 1 5 ) O t h er r el a t ed pa r t ies T h e dir ec t o r s o f C T B C F ina nc ia l H o l ding C o . , L t d.

a nd s u b s idia r ies ( inc l u ding independent dir ec t o r s ) , s u per v is o r s , m a na g er s a nd t h eir f a m il ies , s po u s es , et c .

N o t e: T h e s pec ia l pu r po s e ent it y t h a t is c o nt r o l l ed b y t h e B a nk .

118


118

( B ) S ig nif ic a nt t r a ns a c t io ns b et w een r el a t ed pa r t ies a nd t h e B a nk ( a ) L ea s e

F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e r ent a l r ev enu e t h a t t h e B a nk r ec eiv ed f r o m r el a t ed pa r t ies f o r t h e r ent a l o f b u il ding s , pa r k ing s pa c es , a nd s a f e depo s it b o xes a m o u nt ed t o $ 1 4 6 , 24 3 a nd $ 5 9 , 7 9 4 , r es pec t iv el y , c o ns t it u t ing 4 6 . 1 5 % a nd 4 1 . 6 2% , r es pec t iv el y , o f t o t a l r ent a l inc o m e. As o f D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , depo s it s f o r r ent ing s a f e b o xes t o r el a t ed pa r t ies a m o u nt ed w er e a l l $ 6 , r es pec t iv el y , t h e r ent s r ec eiv ed in a dv a nc e f r o m r el a t ed pa r t ies a m o u nt ed $ 2, 9 9 0 a nd $ 9 , 0 26 , r es pec t iv el y . T h e g u a r a nt ee depo s it f o r t h e u s e o f s pa c e a nd m a c h iner y r ec eiv ed f r o m r el a t ed pa r t ies a m o u nt ed t o $ 3 9 , 8 8 7 a nd $ 20 , 3 8 2, r es pec t iv el y .

( b ) D o na t io ns


Rel ated p arty 2015 2014 C T B C C h a r it y F o u nda t io n $ 9 1 1 4 6 , 0 0 5 C T B C C u l t u r e F o u nda t io n 4 0 , 0 0 0 3 1 , 0 0 0 C T B C F ina nc ia l M a na g em ent C o l l eg e 9 2, 0 0 0 - T o t a l $ 132,911 77,005

( c ) G u a r a nt ee

December 31, 2015

Rel ated p arty

Max imu m

bal ance

Ending bal ance

Bal ance of gu arantee

res erv e

Range of

interes t rates

Col l ateral S h o w a D enk o H d T r a c e

C o r p. $ 3 , 0 0 0 3 , 0 0 0 - 1 % S ec u r it ies / t h e N T D

depo s it s in t h e B a nk

December 31, 2014

Rel ated p arty

Max imu m

bal ance

Ending bal ance

Bal ance of gu arantee

res erv e

Range of

interes t rates

Col l ateral S h o w a D enk o H d T r a c e

C o r p. $ 3 , 0 0 0 3 , 0 0 0 - 1 % S ec u r it ies / t h e N T D

depo s it s in t h e B a nk C o l l a m a t r ix C o . , L t d. 3 , 6 3 9 - - 1 % B a t c h - t y pe c r edit

g u a r a nt ee

119


119

( d) L o a ns

December 31, 2015 Settl ement s tatu s

Categories Nu mber/ name of

rel ated p arties Max imu m

bal ance Ending

bal ance Normal

l oans Ov erdu e

l oans

Col l ateral Loan

conditions C o ns u m e r l o a n— em pl o y ee 4 8 $ 21 , 4 7 2 9 , 8 21 9 , 8 21 - N o ne N o t e

H o m e l o a n m o r t g a g e 3 7 1 2, 1 4 1 , 0 7 7 1 , 8 4 7 , 6 4 2 1 , 8 4 7 , 6 4 2 - R ea l es t a t e/ o t h er s 〃

O t h er s H u a k u D ev el o pm ent C o . , L t d. 1 , 0 5 0 , 0 0 0 1 , 0 5 0 , 0 0 0 1 , 0 5 0 , 0 0 0 - R ea l es t a t e 〃

〃 N a n Y a T ec h no l o g y C o r po r a t io n

1 , 0 8 0 , 0 0 0 8 0 0 , 0 0 0 8 0 0 , 0 0 0 - M a c h iner y 〃

〃 C T C G r o u p I nc . 5 1 8 , 0 7 2 5 0 2, 1 0 6 5 0 2, 1 0 6 - R ea l es t a t e 〃

〃 N a n Y a P l a s t i c s C o r po r a t i o n 9 7 9 , 6 3 2 4 6 8 , 0 0 4 4 6 8 , 0 0 4 - R ea l es t a t e/ pl a nt / m a c h ine r o o m

〃

〃 T a ipei F ina nc ia l C ent er C o r po r a t io n

4 4 9 , 4 8 3 4 1 6 , 8 4 9 4 1 6 , 8 4 9 - R ea l es t a t e/ b u il ding s f o r c o m m e r c i a l u s e

〃

〃 J u ng g u a n I nv es t m ent C o . , L t d. 3 5 5 , 0 0 0 3 5 5 , 0 0 0 3 5 5 , 0 0 0 - R ea l es t a t e 〃

〃 Z h o ng h a ng C o , . L t d 3 1 9 , 20 0 27 1 , 6 0 0 27 1 , 6 0 0 - V eh i c l e/ c a r g o a i r c r a f t

〃 K u a n H o D ev el o pm ent C o . , L t d.

24 5 , 0 0 0 24 5 , 0 0 0 24 5 , 0 0 0 - R ea l es t a t e 〃

〃 S u ng h u ng I nv es t m ent C o . , L t d.

4 4 , 0 0 0 4 4 , 0 0 0 4 4 , 0 0 0 - R ea l es t a t e 〃

〃 C h a ng c h i I nv es t m ent s C o . , L t d.

1 0 , 7 8 0 1 0 , 0 5 8 1 0 , 0 5 8 - R ea l es t a t e 〃

〃 W ei F u I nv es t m ent C o . , L t d. 9 0 , 0 0 0 5 0 , 0 0 0 5 0 , 0 0 0 - R ea l es t a t e 〃

〃 Ac a c i a C o m pa ny 5 , 0 0 0 5 , 0 0 0 5 , 0 0 0 - O t h er / b a t c h - t y pe c r edit g u a r a nt ee

〃

〃 O t h er s 5 5 , 7 1 9 4 7 , 3 4 6 4 7 , 3 4 6 - R ea l es t a t e 〃

December 31, 2014 Settl ement s tatu s

Categories Nu mber/ name of

rel ated p arties Max imu m

bal ance Ending

bal ance Normal

l oans Ov erdu e

l oans

Col l ateral Loan

conditions C o ns u m e r l o a n— em pl o y ee 4 0 $ 1 7 , 7 4 5 9 , 0 7 1 9 , 0 7 1 - N o ne N o t e H o m e l o a n m o r t g a g e 3 27 1 , 8 3 5 , 3 3 3 1 , 5 7 4 , 9 5 8 1 , 5 7 4 , 9 5 8 - R ea l es t a t e/ o t h er s 〃 O t h er s N a n Y a P l a s t i c s C o r po r a t i o n 9 5 1 , 7 4 4 9 1 9 , 1 8 7 9 1 9 , 1 8 7 - R ea l es t a t e/ pl a nt /

m a c h ine r o o m

〃

〃 C T C G r o u p I nc . 5 0 9 , 9 20 4 9 6 , 0 22 4 9 6 , 0 22 - R ea l es t a t e 〃〃 T a ipei F ina nc ia l C ent er

C o r po r a t io n 5 25 , 27 0 4 4 9 , 4 8 3 4 4 9 , 4 8 3 - R ea l es t a t e/ b u il ding s

f o r c o m m e r c i a l u s e 〃

〃 J u ng g u a n I nv es t m ent C o . , L t d. 3 5 5 , 0 0 0 3 5 5 , 0 0 0 3 5 5 , 0 0 0 - R ea l es t a t e 〃〃 Z h o ng h a ng C o , . L t d 3 6 6 , 8 0 0 3 1 9 , 20 0 3 1 9 , 20 0 - V eh i c l e/ c a r g o a i r c r a f t 〃〃 K u a n H o D ev el o pm ent C o . ,

L t d. 24 5 , 0 0 0 24 5 , 0 0 0 24 5 , 0 0 0 - R ea l es t a t e 〃

〃 C h a il ea s e I nt er na t i o na l L ea s ing C o . , L t d. ( V iet na m )

20 5 , 5 0 0 1 22, 7 9 2 1 22, 7 9 2 - M a c h iner y 〃

〃 W ei F u I nv es t m ent C o . , L t d. 9 0 , 0 0 0 9 0 , 0 0 0 9 0 , 0 0 0 - R ea l es t a t e 〃〃 S u ng h u ng I nv es t m ent C o . ,

L t d. 4 3 , 3 0 0 4 3 , 3 0 0 4 3 , 3 0 0 - R ea l es t a t e 〃

〃 C h a ng c h i I nv es t m ent s C o . , L t d.

1 0 , 6 0 4 1 0 , 3 0 5 1 0 , 3 0 5 - R ea l es t a t e 〃

〃 F o r m o s a S u m c o T ec h no l o g y C o r po r a t io n

8 , 3 1 6 5 , 5 4 4 5 , 5 4 4 - M a c h iner y 〃

〃 Ac a c i a C o m pa ny 1 0 , 0 0 0 5 , 0 0 0 5 , 0 0 0 - B a t c h - t y pe c r edit g u a r a nt ee

〃

〃 O t h er s 1 4 4 , 6 3 7 4 3 , 7 6 4 4 3 , 7 6 4 - R ea l es t a t e 〃

N o t e: T h e t er m s o f l o a ns b et w een r el a t ed a nd no n- r el a t ed pa r t ies a r e ident ic a l .

120


12 0

( e) D epo s it s

December 31, 2015

Rel ated p arty Max imu m bal ance Ending bal ance Range of interes t

rates Interes t ex p ens es

(f or the year 2015)

T a i w a n L if e I ns u r a nc e C o . , L t d. $ 25 , 8 7 8 , 9 1 8 25 , 8 7 8 , 9 1 8 0 ~ 0 . 6 5 % 2, 7 5 0 S h o w a D enk o H d T r a c e C o r p. 4 , 9 0 1 , 8 5 5 3 , 7 6 6 , 9 8 1 0 ~ 1 . 3 5 % 1 4 , 5 1 2 C T B C L i f e I ns u r a nc e C o . , L t d. 1 9 , 29 4 , 1 3 2 3 , 7 0 6 , 0 3 4 0 ~ 0 . 6 % 7 , 5 6 6 C T B C S ec u r it ies C o . , L t d. 3 , 7 6 5 , 6 1 0 1 , 9 0 3 , 1 27 0 ~ 1 . 3 5 % 1 2, 8 29

C T B C F ina nc ia l H o l ding C o . , L t d. 1 6 , 5 9 9 , 0 1 1 1 , 8 5 4 , 0 7 3 0 ~ 0 . 1 7 % 3 , 4 5 5 C T B C C h a r it y F o u nda t io n 1 , 3 28 , 0 4 2 1 , 0 9 0 , 3 8 6 0 ~ 1 . 3 5 % 8 , 25 8

Ab ic o As ia C a pit a l C o . , L t d. 1 , 0 0 1 , 0 0 0 9 3 9 , 5 3 7 0 ~ 1 . 0 9 % 1 , 4 0 1 T a i w a n S po r t s L o t t e r y C o . , L t d. 1 , 1 1 4 , 6 9 8 8 0 4 , 4 5 0 0 ~ 0 . 1 7 % 1 , 0 6 7 C T B C I nv es t m ent s C o . , L t d. 4 6 1 , 27 8 4 26 , 5 9 5 0 ~ 0 . 7 5 % 1 , 5 8 7

T a i w a n L o t t e r y C o . , L t d. 1 , 8 5 0 , 6 7 7 4 1 9 , 1 20 0 ~ 0 . 5 5 % 3 , 3 0 9 T a i w a n I ns t it u t e o f E c o no m i c R es ea r c h 4 4 6 , 6 8 9 3 8 6 , 229 0 ~ 1 . 4 0 % 2, 0 4 8 O v er s e a s I nv es t m ent & D ev el o pm ent C o r p. 3 7 7 , 8 9 3 3 3 7 , 5 4 3 0 ~ 1 . 1 0 % 9 1 7 K a ina n H i g h S c h o o l o f C o m m e r c e a nd I ndu s t r y 4 0 5 , 9 6 9 29 0 , 3 5 0 0 ~ 1 . 3 7 % 3 , 0 0 6 N a t i o na l C r edit C a r d C ent er o f R . O . C . 7 8 8 , 8 27 27 2, 25 7 0 ~ 1 . 3 9 % 1 , 4 26 C T B C V ent u r e C a pit a l C o . , L t d. 3 9 9 , 4 8 2 21 4 , 3 6 6 0 ~ 0 . 1 7 % 1 3 1 S t r a it s E xc h a ng e F o u nda t io n 1 8 7 , 1 6 4 1 8 7 , 0 3 0 0 . 0 2~ 1 . 3 7 % 2, 4 5 6 H ew ei I nv es t m ent C o . , L t d. 3 3 7 , 3 5 0 1 8 3 , 1 7 6 0 ~ 0 . 1 7 % 4 23 F eng l u D ev el o pm ent & I nv es t m ent C o . , L t d. 3 0 0 , 3 0 7 1 6 5 , 8 3 0 0 ~ 0 . 1 7 % 1 8 3 K u a n H o D ev el o pm ent C o . , L t d. 25 4 , 1 3 2 1 5 4 , 3 9 3 0 ~ 0 . 1 7 % 23 3 M y L ea s ing ( M a u r it iu s ) C o r p. 1 , 29 1 , 229 1 4 9 , 6 9 8 0 . 0 2~ 0 . 3 0 % 1 1 2 S u ng y o ng I nv es t m ent C o . , L t d. 28 2, 0 8 1 1 3 7 , 4 5 6 0 ~ 0 . 1 7 % 20 2 C T B C F ina nc ia l M a na g em ent C o l l e g e 1 3 5 , 29 6 1 29 , 9 1 7 0 ~ 1 . 3 7 % 7 5 W eih u ng I nv es t m ent C o . , L t d. 29 8 , 3 9 6 1 1 4 , 25 4 0 . 0 1 ~ 0 . 0 4 % 5 5

J u ng g u a n I nv es t m ent C o . , L t d. 3 6 1 , 25 6 1 1 0 , 1 4 2 0 ~ 0 . 1 7 % 27 3 O t h er s 1 4 , 7 1 5 , 6 5 8 5 , 6 3 5 , 0 5 5 4 5 , 5 1 2

T o t a l $ 96,776,950 49,256,917 113,786

December 31, 2014

Rel ated p arty

Max imu m bal ance Ending bal ance

Range of interes t rates

Interes t ex p ens es (f or the year 2014)

C T B C L i f e I ns u r a nc e C o . , L t d. $ 1 5 , 9 6 7 , 7 8 5 8 , 5 8 2, 6 5 2 0 ~ 0 . 6 8 % 6 , 29 4 S h o w a D enk o H d T r a c e C o r p. 6 , 5 0 4 , 7 3 1 3 , 9 1 3 , 21 1 0 ~ 1 . 3 5 % 1 3 , 3 8 2 C T B C S ec u r it ies C o . , L t d. 2, 4 5 0 , 221 1 , 7 23 , 3 28 0 ~ 1 . 3 5 % 1 4 , 6 8 2 C T B C C h a r it y F o u nda t io n 1 , 1 7 4 , 8 5 8 9 25 , 9 23 0 ~ 1 . 3 5 % 8 , 29 1 T a i w a n S po r t s L o t t e r y C o . , L t d. 5 9 2, 3 8 6 5 3 2, 5 24 0 ~ 0 . 1 7 % 4 6 2 C h u ng C h eng I nv es t m ent C o . , L t d. 5 1 3 , 3 6 0 5 1 2, 6 5 0 0 ~ 0 . 1 7 % 8 5 3 S u ng h u ng I nv es t m ent C o . , L t d. 4 3 5 , 5 0 6 4 3 4 , 3 0 6 0 ~ 0 . 1 7 % 4 9 7 T a i w a n I ns t it u t e o f E c o no m i c R es ea r c h 4 1 5 , 20 8 3 8 6 , 4 9 5 0 ~ 1 . 4 0 % 1 , 6 7 5 H ew ei I nv es t m ent C o . , L t d. 4 8 9 , 9 1 1 3 3 7 , 3 5 0 0 ~ 0 . 1 7 % 7 6 9 T a i w a n L o t t e r y C o . , L t d. 5 9 5 , 4 4 9 3 1 0 , 1 9 0 0 ~ 0 . 5 5 % 6 1 1 W eih u ng I nv es t m ent C o . , L t d. 3 1 0 , 6 9 8 29 8 , 3 9 6 0 . 0 4 % 1 20 K a ina n H i g h S c h o o l o f C o m m e r c e a nd I ndu s t r y 3 1 6 , 5 6 7 29 0 , 9 6 9 0 ~ 1 . 3 7 % 3 , 0 4 2 C T B C I nv es t m ent s C o . , L t d. 3 5 0 , 3 8 7 29 0 , 3 6 6 0 ~ 0 . 7 5 % 2, 0 6 9 S u ng y o ng I nv es t m ent C o . , L t d. 3 0 5 , 5 9 6 28 2, 0 7 8 0 ~ 0 . 1 7 % 4 8 9 K u a n H o D ev el o pm ent C o . , L t d. 5 0 3 , 24 7 25 4 , 20 4 0 ~ 0 . 1 7 % 7 5 9 J u ng g u a n I nv es t m ent C o . , L t d. 3 21 , 4 21 20 4 , 0 6 8 0 ~ 0 . 1 7 % 3 25 Q u a nw ei I nv es t m ent L i m it ed 6 1 5 , 6 26 1 7 7 , 9 7 9 0 ~ 0 . 1 7 % 26 7 S t r a it s E xc h a ng e F o u nda t io n 1 5 7 , 4 6 4 1 5 7 , 4 6 4 0 . 0 4 ~ 1 . 3 7 % 1 , 27 7 C T B C F ina nc ia l H o l ding C o . , L t d. 1 5 , 228 , 4 0 9 1 4 4 , 6 3 2 0 ~ 0 . 1 7 % 1 , 9 1 0

C T B C V ent u r e C a pit a l C o . , L t d. 3 8 3 , 9 6 8 1 3 8 , 7 5 2 0 ~ 0 . 1 7 % 7 7 G C B F ina nc e ( H K ) L im it ed 1 3 3 , 8 7 6 1 29 , 5 25 0 ~ 0 . 0 0 1 % - F eng l u D ev el o pm ent & I nv es t m ent C o . , L t d. 1 21 , 4 6 6 1 21 , 4 6 6 0 ~ 0 . 1 7 % 1 8 3 H o - Y e h I nv es t m ent C o . , L t d. 1 3 1 , 3 23 1 1 8 , 8 5 8 0 ~ 0 . 0 4 % 3 1

O v er s e a s I nv es t m ent & D ev el o pm ent C o r p. 26 5 , 6 3 3 1 0 6 , 9 4 5 0 ~ 1 . 1 0 % 9 5 8 O t h er s 1 2, 23 6 , 9 8 7 5 , 0 3 3 , 9 8 7 3 4 , 7 9 2

T o t a l $ 60,522,083 25,408,318 93,815

121


12 1

( f ) C a l l l o a ns t o b a nk s


Rel ated p arty Ending

bal ance Range of

interes t rates Interes t

rev enu es T a is h in I nt er na t io na l B a nk $ - 0 . 0 8 ~ 3 . 8 0 % 553

( g ) F ina nc ia l der iv a t iv es

December 31, 2015 Deriv ativ e Bal ance s heet

Rel ated p arty f inancial

ins tru ments Contract

p eriod Notional

p rincip al Unreal iz ed

p rof it (l os s )

Accou nt Ending

Bal ance T a iw a n L if e

I ns u r a nc e C o . , L t d. N o n- del iv er a b l es 0 8 . 0 5 . 20 1 5 ~

0 1 . 1 1 . 20 1 6

N T D 3 , 1 6 5 , 20 0 ( 1 4 7 , 27 6 ) ( N o t e2) ( 1 4 7 , 27 6 )

〃〃 0 1 . 0 5 . 20 1 5 ~

0 3 . 24 . 20 1 6

U S D 1 3 0 , 0 0 0 1 7 9 , 1 0 3 ( N o t e1 ) 1 7 9 , 1 0 3

December 31, 2014 Deriv ativ e Bal ance s heet

Rel ated p arty f inancial

ins tru ments Contract

p eriod Notional

p rincip al Unreal iz ed

p rof it (l os s )

Accou nt Ending

Bal ance T a is h in

I nt er na t io na l B a nk I nt er es t r a t e s w a ps 0 4 . 0 6 . 20 1 0 ~

0 9 . 1 2. 20 1 9

N T D 4 1 , 29 0 , 0 0 0 1 8 , 1 4 3 ( N o t e1 ) 1 8 , 1 4 3

〃 N o n- del iv er a b l es 0 5 . 1 2. 20 1 4 ~

0 6 . 1 8 . 20 1 5

C N Y 6 2, 29 5 ( 23 5 ) ( N o t e2) ( 23 5 )

〃〃 0 1 . 0 2. 20 1 4 ~

0 1 . 0 6 . 20 1 5

U S D 5 , 0 0 0 1 9 9 ( N o t e1 ) 1 9 9

〃 C r o s s c u r r enc y s w a p

0 1 . 0 7 . 20 1 4 ~

0 1 . 0 9 . 20 1 5

N T D 3 0 0 , 8 0 0 ( 1 8 , 0 3 7 ) ( N o t e2) ( 1 8 , 0 3 7 )

〃 M o ney m a r k et s w a p

0 9 . 1 1 . 20 1 4 ~

0 9 . 1 5 . 20 1 5

C N H 1 24 , 4 5 0 5 , 4 0 5 ( N o t e1 ) 5 , 4 0 5

〃〃 0 2. 1 3 . 20 1 4 ~

0 9 . 23 . 20 1 5

U S D 1 7 5 , 0 0 0 3 1 8 , 4 6 1 〃 3 1 8 , 4 6 1

〃〃 0 7 . 0 2. 20 1 4 ~

0 7 . 0 7 . 20 1 5

U S D 20 , 0 0 0 2, 3 5 4 〃 2, 3 5 4

〃〃 0 1 . 1 0 . 20 1 4 ~

0 1 . 1 4 . 20 1 5

N T D 29 6 , 5 5 0

( 20 , 6 3 7 ) ( N o t e2) ( 20 , 6 3 7 )

N o t e 1 : F ina nc ia l a s s et s m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s . N o t e 2: F ina nc ia l l ia b il it ies m ea s u r ed a t f a ir v a l u e t h r o u g h pr o f it o r l o s s .

( h ) T r a ding o f b il l s a nd b o nds


Rel ated p arty Bil l s and bonds

p u rchas ed Bil l s and bonds

s ol d T a is h in I nt er na t io na l B a nk $ 4 5 0 , 0 0 0 -


Rel ated p arty Bil l s and bonds

p u rchas ed Bil l s and bonds

s ol d T a is h in I nt er na t io na l B a nk $ 1 , 0 0 0 , 0 0 0 -

122


12 2

( i) O t h er s

( 1 ) C o m m is s io n a nd o t h er inc o m e

For the year ended December 31 Rel ated p arty Su mmary 2015 2014 C T B C F ina nc ia l H o l ding C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, c o m m i s s i o n

inc o m e a nd inc o m e f r o m g r o u p c a t er ing

$ 28 , 2 6 7 26 , 5 4 0

C T B C S ec u r it ies C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, pr o f it s f r o m s el l ing pr o du c t s , inc o m e f r o m g r o u p c a t er ing , a nd c o m m i s s i o n inc o m e

1 6 , 3 3 6 1 2, 25 8

T a iw a n L o t t er y C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, inc o m e f r o m m a c h ine r el o c a t i o n a nd inc o m e f r o m g r o u p c a t er ing

7 , 228 7 , 3 4 6

C T B C As ia L im it ed C o m m i s s i o n inc o m e 2, 5 6 8 2, 3 7 4 C T B C L if e I ns u r a nc e C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, pr o f it s f r o m

s el l ing pr o du c t s a nd c o m m i s s io n inc o m e

5 7 1 , 0 4 5 1 9 3 , 9 5 7

C h a il ea s e F ina nc e C o . , L t d. M a na g em ent r ev enu e a nd c o m m i s s i o n inc o m e

1 , 3 5 2 6 9 8

C T B C I nv es t m ent s C o . , L t d. C o m m i s s i o n f o r t r u s t , a l l o c a t i o n o f inf o r m a t i o n, inc o m e f r o m g r o u p c a t er ing a nd f eedb a c k f u nd

7 5 , 6 4 7 3 2, 8 28

K inpo E l ec t r o nic s , I nc . C o m m i s s i o n inc o m e 2, 0 8 4 2, 0 7 6 H u a k u D ev el o pm ent C o . , L t d. C o m m i s s i o n inc o m e 6 0 0 - T a iw a n L if e I ns u r ea nc e C o . , L t d C o m m i s s i o n inc o m e a nd ins u r a nc e

c o m m i s s io n f o r j o int s a l es . 8 , 5 3 2 -

T L G I ns u r a nc e C o . , L t d. C o m m i s s i o n inc o m e a nd ins u r a nc e c o m m i s s io n f o r j o int s a l es .

1 , 4 5 4 -

G r a nd B il l s F ina nc e C o r po r a t i o n C o m m i s s i o n inc o m e 5 21 5 9 3 I ndiv idu a l s C o m m i s s i o n f o r f u nds 9 , 3 7 9 7 , 6 9 1 T o t a l $ 725,013 $ 286,361

T h e b a l a nc e o f a c c o u nt s r ec eiv a b l e f o r f o r eg o ing t r a ns a c t io ns w er e a s f o l l o w s :

Rel ated p arty

Su mmary December 31,

2015 December 31,

2014 C T B C F ina nc ia l H o l ding C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, c o m m i s s i o n

inc o m e a nd inc o m e f r o m g r o u p c a t er ing

$ 1 , 8 23 2, 0 7 9

C T B C S ec u r it ies C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, pr o f it s f r o m s el l ing pr o du c t s , inc o m e f r o m g r o u p c a t er ing , a nd c o m m i s s i o n inc o m e

1 , 8 4 6 29 9

T a iw a n L o t t er y C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, inc o m e f r o m m a c h ine r el o c a t i o n a nd inc o m e f r o m g r o u p c a t er ing

5 9 9 6 1 6

C T B C As ia L im it ed C o m m i s s i o n inc o m e 1 6 3 1 3 3 C T B C L if e I ns u r a nc e C o . , L t d. Al l o c a t i o n o f inf o r m a t i o n, pr o f it s f r o m

s el l ing pr o du c t s a nd c o m m i s s io n inc o m e

3 24 , 8 8 1 2, 7 1 3

C T B C I nv es t m ent s C o . , L t d. C o m m i s s i o n f o r t r u s t , a l l o c a t i o n o f inf o r m a t i o n, inc o m e f r o m g r o u p c a t er ing a nd f eedb a c k f u nd

3 4 1 1 2

K inpo E l ec t r o nic s , I nc . C o m m i s s i o n inc o m e 3 22 1 6 1 T a iw a n L if e I ns u r ea nc e C o . , L t d C o m m i s s i o n inc o m e a nd ins u r a nc e

c o m m i s s io n f o r j o int s a l es . 3 , 9 4 8 -

T L G I ns u r a nc e C o . , L t d. C o m m i s s i o n inc o m e a nd ins u r a nc e c o m m i s s io n f o r j o int s a l es .

2 -

G r a nd B il l s F ina nc e C o r po r a t i o n C o m m i s s i o n inc o m e 3 6 4 3 T o t a l $ 333,961 6,056

123


12 3

( 2) H a ndl ing f ees a nd o t h er g ener a l a dm inis t r a t io n expens es For the year ended December 31 Rel ated p arty Su mmary 2015 2014 C T B C S ec u r it ies C o . , L t d. S er v ic e f ees f o r t r u s t , b r o k er a g e f ees

a nd s it e u s a g e expens es $ 4 1 , 8 4 9 4 2, 0 8 8

C T B C S ec u r it y C o . , L t d. S ec u r it y f ees 1 3 1 , 3 5 7 1 0 2, 5 0 0 T a iw a n L o t t er y C o . , L t d. L o t t er y s er v ic e f ees 2, 26 1 , 3 0 2 2, 3 1 7 , 8 4 7 C h a il ea s e F ina nc e C o . , L t d. B u s ines s s er v ic e f ees , l ea s ing o f o f f i c ia l

v eh ic l es a nd r ent a l f ees 5 9 , 6 7 7 27 , 0 3 4

T a iw a n I ns t it u t e o f E c o no m ic R es ea r c h

E xpens e f o r do m es t ic ec o no m ic s r es ea r c h a nd b u s ines s c o ns u l t ing c o m m i s s io ned r es ea r c h

1 0 , 20 0 1 0 , 6 5 0

S u ng b o C o . , L t d. G if t expens es 2, 5 0 9 2, 223 C h a il ea s e R es o u r c es T ec h no l o g y

C o . L t d. G if t expens es - 5 9 9

AP E X C r edit S o l u t io ns I nc . C o l l ec t io n a s s i s t a nc e f ees 21 , 1 8 2 1 4 , 6 28 I m po r t er a nd E xpo r t er As s o c ia t i o n

o f T a ipei R ent a l f ees , u t il it ies expens es a nd

m a na g em ent f ees f o r b r a nc h es 4 , 4 3 1 4 , 1 5 7

B o s s er D es ig n I nc . U ph o l s t er y f ees 25 , 1 9 1 4 3 , 9 7 2 T a ipei F ina nc ia l C ent er C o r po r a t io n F eedb a c k f u nd f o r j o int - b r a nd c r edit

c a r d pa y m ent a nd c o m pl im ent a r y g if t 9 9 , 220 1 1 2, 7 5 9

H u - Y i S o l u t i o n C o r p. ( S h a ng h a i) C o ns u l t a nc y f ees - 5 , 26 5 L a ndr ic h I nt er na t io na l L t d. G if t expens es 7 25 5 1 1 C T B C L if e I ns u r a nc e C o . , L t d. G r o u p ins u r a nc e f ees a nd b o nu s f o r

j o int s a l es c a m pa ig ns 1 1 0 , 6 7 6 1 24 , 225

N a t io na l C r edit C a r d C ent er o f R . O . C .

C o m pu t er o per a t i o n h a nding c h a r g e a nd f u nc t io na l expens es

9 5 , 7 5 6 -

B r o t h er s E nt er t a ining C o . , L t d. S po ns o r s h ip a nd a dv er t is ing expens es 21 0 , 8 1 2 - T h e T h ir d W ednes da y C l u b Annu a l f ee a nd S po ns o r s h ip 3 , 3 0 9 - L ea n D ev T ec h no l o g y C o . , L t d. S y s t em f u nc t io n im pr o v em ent f ees 1 , 9 0 3 - T a iw a n R el o C l u b , L im it ed G if t expens es 4 0 , 6 7 3 - W ei C h u a ng I nf o r m a t io n C o . , L t d. S y s t em f u nc t io n im pr o v em ent f ees 6 3 2 - C T B C C u l t u r e F o u nda t io n Adv er t is ing S po ns o r s h ip 2, 7 8 3 - T a iw a n L if e ins u r a nc e C o . , L t d R ent a l f ees 1 , 3 20 - T o t a l $ 3,125,507 2,808,458

F o r eg o ing t r a ns a c t io ns , a c c o u nt s pa y a b l e b a l a nc es w er e a s f o l l o w s :

Rel ated p arty

Su mmary December 31,

2015 December 31,

2014 C T B C S ec u r it ies C o . , L t d. S er v ic e f ees f o r t r u s t , b r o k er a g e f ees

a nd s it e u s a g e expens es $ 6 , 4 0 0 5 , 6 1 0

C T B C S ec u r it y C o . , L t d. S ec u r it y f ees 8 , 0 8 7 5 6 9 T a iw a n L o t t er y C o . , L t d. L o t t er y s er v ic e f ees 1 , 0 8 6 , 226 1 , 5 0 1 , 5 3 8 AP E X C r edit S o l u t io ns I nc . C o l l ec t io n a s s i s t a nc e f ees 3 , 3 3 3 8 1 1 T a ipei F ina nc ia l C ent er C o r po r a t io n F eedb a c k f u nd f o r j o int - b r a nd c r edit

c a r d pa y m ent a nd c o m pl im ent a r y g if t - 1 1 , 1 3 8

C T B C L if e I ns u r a nc e C o . , L t d. G r o u p ins u r a nc e f ees a nd b o nu s f o r j o int s a l es c a m pa ig ns

1 1 , 5 28 1 7 , 9 9 8

T o t a l $ 1,115,574 1,537,664

124


12 4

( 3 ) O t h er s

Rel ated p arty

Su mmary

December 31, 2015

December 31, 2014

C h a il ea s e F ina nc e C o . , L t d. R el ea s ed u ndu e l o a ns ( N o t e) $ 3 0 7 , 7 0 8 9 28 , 7 4 2 C T B C As ia L im it ed Adv a nc es f o r o f f i c e r ent a l s 4 , 5 27 3 , 5 4 8 G C B F ina nc e ( H K ) L im it ed Adv a nc es f o r o f f i c e r ent a l s - 8 9 4 N a t io na l C r edit C a r d C ent er

o f R . O . C . Adv a nc es f o r a c q u ir ing s er v ic e a nd s et t l em ent

r ec eiv a b l e 2, 1 9 4 , 3 0 5 -

O t h er s Adv a nc es f o r u t il it ies expens es , s ec u r it y f ees t r a ining a nd o t h er expens e

4 , 9 0 7 2, 3 3 2

T o t a l $ 2,511,447 935,516

N o t e: T h e B a nk s ig ned a s t r a t eg ic a l l ia nc e a g r eem ent w it h C h a il ea s e F ina nc e C o . ,

L t d. a g r eeing l o a ns w il l b e r el ea s ed dir ec t l y t o C h a il ea s e’ s c l ient s , a nd C h a il ea s e pl edg ed t o b u y b a c k a nd s et t l e a l l deb t s o nc e a ny del a y a r is es .

P l ea s e r ef er t o N o t e 9 ( A) f o r m o r e inf o r m a t io n r eg a r ding t h e B a nk l o a ned t o P T B a nk C T B C I ndo nes ia , C T B C B a nk ( P h il ippines ) C o r p. a nd T h e T o k y o S t a r B a nk , L t d. w it h g u a r a nt eed. N o s ig nif ic a nt dis c r epa nc y in t r a ns a c t io n t er m s f o u nd b et w een r el a t ed pa r t y t r a ns a c t io n a nd no n- r el a t ed pa r t y t r a ns a c t io n.

( C ) K ey m a na g em ent per s o nnel c o m pens a t io n in t o t a l

For the year ended December 31 2015 2014 S a l a r y a nd o t h er s h o r t - t er m em pl o y ee b enef it s $ 1 , 1 20 , 6 0 7 9 3 6 , 1 1 1 P o s t - em pl o y m ent b enef it s 6 8 , 0 1 7 1 6 , 5 6 9 S h a r e- b a s ed pa y m ent 23 6 , 0 7 0 28 , 5 7 5 T o t a l $ 1,424,694 981,255

125


12 5

8. P LEDG ED ASSETS P l edg ed a s s et s o f t h e B a nk a nd it s s u b s idia r ies w er e a s f o l l o w s :

U nit : I n T h o u s a nds o f N ew T a iw a n do l l a r s

As s ets Typ e of

s ecu rities P ar v al u e of ref u ndabl e dep os its

December 31, 2015 December 31, 2014 P u rp os e of col l ateral D u e f r o m C ent r a l B a nk a nd c a l l

l o a ns t o b a nk T im e depo s it - 5 0 0 , 0 0 0 D epo s it s f o r c a l l ing l o a ns in

f o r eig n c u r r enc y 〃 4 , 4 0 0 , 0 0 0 1 , 4 0 0 , 0 0 0 C a l l l o a n l iq u ida t io n a c c o u nt in

U . S . D o l l a r s 〃 8 0 0 , 0 0 0 - C a l l l o a n l iq u ida t io n a c c o u nt in

J P Y D o l l a r s 〃 1 0 0 , 0 0 0 1 0 0 , 0 0 0 D epo s it s f o r b il l s dea l er

Av a il a b l e - f o r - s a l e f ina nc ia l a s s et s －net

B o nd 5 , 6 4 3 , 28 1 3 , 27 2, 8 3 4 C r edit l ine f r o m F eder a l R es er v e B a nk a nd o t h er depo s it s

N C D o f C ent r a l B a nk - 8 , 0 0 0 , 0 0 0 D a y t im e o v er dr a f t s o f C ent r a l B a nk

〃 - 9 , 5 0 0 , 0 0 0 D epo s it s f o r c a l l ing l o a ns in f o r eig n c u r r enc y

G o v e r nm ent b o nd 21 1 , 4 7 7 1 9 8 , 5 5 5 O v er dr a f t s s ec u r ed

〃 - 5 , 7 7 2, 1 6 5 C o l l a t e r a l f o r der iv a t iv e t r a ns a c t io ns

〃 22, 0 0 2, 0 9 7 6 3 , 6 25 , 6 7 0 G u a r a nt ee depo s it s f o r t r a ns a c t io n s et t l em ent s a nd c a l l l o a ns f r o m b a nk s

〃 24 , 6 8 8 , 0 27 3 1 , 0 22, 1 9 2 R epu r c h a s e a g r eem ent pl edg e

〃 3 3 0 , 9 4 0 5 8 4 , 5 3 7 F u t u r es m a r g ins

〃 8 , 25 6 , 1 0 9 7 , 9 6 5 , 1 9 5 M a r k et a b l e s ec u r it ies ent r u s t ed

〃 4 9 , 9 0 0 6 8 , 7 8 7 O t h er r eq u ir ed r es er v e

R ec eiv a b l es M a t u r ed s ec u r it ies c l a s s i f ied u nder o t h e r r ec eiv a b l es

2, 20 0 2, 20 0 D epo s it s f o r l it i g a t io n a nd o t h e r s

H el d- t o - m a t u r it y f ina nc ia l a s s et s －net

N C D o f C ent r a l B a nk 9 , 0 0 0 , 0 0 0 - D a y t im e o v er dr a f t s o f C ent r a l B a nk

〃 1 0 , 0 0 0 , 0 0 0 - D epo s it s f o r c a l l ing l o a ns in f o r eig n c u r r enc y

〃 5 , 6 0 0 , 0 0 0 8 , 6 0 0 , 0 0 0 C a l l l o a n l iq u ida t io n a c c o u nt in U . S . do l l a r s

N C D 3 9 1 , 0 0 0 3 9 1 , 0 0 0 G u a r a nt ee f u l f il l m ent o f l o ng - t er m pr epa id r ent

G o v e r nm ent b o nd 4 9 0 , 0 0 0 4 7 0 , 0 0 0 T r u s t f u nds r es er v e

〃 1 5 0 , 0 0 0 1 5 0 , 0 0 0 B o nd s et t l e m ent r es er v es

〃 7 2, 9 0 0 8 2, 6 0 0 D epo s it s f o r l it i g a t io n a nd o t h e r s

〃 5 , 0 0 0 9 , 0 0 0 O t h er

O t h er f ina nc ia l a s s et s T im e depo s it 7 0 , 0 0 0 7 0 , 0 0 0 O per a t i o na l g u a r a nt ee depo s it f o r s ec u r it ies dea l er

〃 4 0 , 0 0 0 4 0 , 0 0 0 U nder w r it ing g u a r a nt ee depo s it f o r s ec u r i t ies dea l er

〃 1 0 , 0 0 0 1 0 , 0 0 0 G u a r a nt ee depo s it f o r f u t u r es dea l er

〃 24 2, 8 6 9 24 1 , 6 0 6 C P C C o r po r a t i o n, T a i w a n g u a r a nt ee f u l f il l m ent

〃 4 9 , 5 0 0 4 9 , 5 0 0 P u b l i c w el f a r e w a l k w a y g u a r a nt ee f u l f il l m ent

As o f D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e depo s it s f o r pu b l ic w el f a r e l o t t er y is s u a nc e o f t h e B a nk ’ s ir r ev o c a b l e s t a ndb y l et t er o f c r edit w er e a l l $ 1 , 0 5 0 , 0 0 0 .

126


12 6

9. SIG NIFICANT CONTING ENT LIABILITIES AND UNRECOG NIZ ED CONTRACT COMMITMENTS ( A) M a j o r c o m m it m ent s a nd c o nt ing enc ies December 31, 2015 December 31, 2014

C o nt ing ent l ia b il it ies f r o m g u a r a nt ee a nd l et t er o f c r edit b u s ines s $ 7 6 , 3 0 8 , 4 1 0 6 2, 6 29 , 5 4 4 P r o m is s o r y no t e t o C ent r a l B a nk f o r B a nk ’ s c l ea r a nc e 1 , 7 9 3 , 0 3 2 2, 1 24 , 20 6 C l ient no t es in c u s t o dy 9 8 , 20 4 , 3 9 3 9 2, 3 5 3 , 29 2 M a r k et a b l e s ec u r it ies a nd deb t s in c u s t o dy 4 8 2, 3 8 8 , 25 1 4 5 2, 1 6 4 , 0 7 6 C o ns ig ned t r a v el er s ’ c h ec k s in c u s t o dy 3 6 1 , 5 9 7 3 5 0 , 25 1 D es ig na t ed pu r po s e t r u s t a c c o u nt s 8 3 6 , 7 1 5 , 0 0 1 8 1 9 , 3 9 7 , 8 1 6 O t h er it em s in c u s t o dy 4 5 6 , 4 7 3 4 0 2, 6 4 4 T o t a l $ 1,496,227,157 1,429,421,829

As o f D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e c r edit a m o u nt o f t h e c a nc el l a b l e l o a n c o m m it m ent s o f t h e B a nk a nd it s s u b s idia r ies w er e $ 1 , 6 0 8 , 3 6 5 , 9 1 8 a nd $ 1 , 0 4 1 , 0 8 0 , 3 9 9 , r es pec t iv el y . O n S ept em b er 1 , 20 1 2, t h e B a nk s ig ned a f o r m a l r enew a l o f t h e s er v ic es c o nt r a c t f o r inf o r m a t io n r es o u r c es s u ppl y t h e B a nk w it h I nt er na t io na l B u s ines s M a c h ines , a u t h o r iz ing a f iv e- y ea r c o nt r a c t t er m c o m m enc ing f r o m S ept em b er 1 , 20 1 2, a nd ending o n Au g u s t 3 1 , 20 1 7 , f o r t h e a m o u nt o f $ 1 , 8 0 5 , 0 0 0 , w h ic h inc l u des a f ixed m o nt h l y f ee o f $ 7 , 8 4 4 c o m pr is ing a h o s t c o m pu t er l ea s e f ee, a n a u t h o r iz a t io n f ee, a nd a n a nnu a l s o f t w a r e m a int ena nc e f ee. T h e B a nk w a s des ig na t ed b y t h e M inis t r y o f F ina nc e ( t h e “ M O F ” ) a s t h e is s u ing ins t it u t io n f o r t h e f o u r t h t er m o f pu b l ic w el f a r e l o t t er y . T h e per io ds o f f o r ea c h t er m a r e f r o m J a nu a r y 1 , 20 1 4 t o D ec em b er 3 1 , 20 23 , r es pec t iv el y . T h e B a nk w a s a u t h o r iz ed t o a r r a ng e a nd is s u e t r a dit io na l l o t t er y , s c r a t c h - a nd- w in l o t t er y , a nd c o m pu t er iz ed l o t t er y t ic k et s . F o r t h e f o u r t h t er m o f pu b l ic w el f a r e l o t t er y , t h e B a nk r ec eiv es a c o m m is s io n f o r is s u ing l o t t er y t ic k et s , r epr es ent ing 4 . 3 5 % o f t h e t o t a l l o t t er y s a l es a m o u nt . T h e c o m m is s io n w il l b e s et t l ed m o nt h l y . And t h e B a nk ’ s pr o f it w il l b e w h a t r em a ins a f t er a f ixed pa y m ent o f $ 2, 7 0 0 , 0 0 0 t o t h e M O F per y ea r . H o w ev er , if t h e a m o u nt o f a nnu a l t o t a l l o t t er y s a l es o f y ea r o f 20 1 5 is l es s t h a n 8 0 % o f pr o m is ed s a l es , w h ic h is $ 1 1 6 b il l io n, t h en t h e B a nk needs t o pa y 26 . 7 5 % o f t h e s h o r t a g e b et w een t h e pr o m is ed a nd a c t u a l s a l es a m o u nt t o t h e g o v er nm ent . F u r t h er m o r e, in o r der t o ens u r e t h a t t h e l o t t er y pr iz e pa y - o u t r a t e is no t g r ea t er t h a n 6 0 % o f t h e l o t t er y is s u ing a m o u nt , t h e B a nk c r ea t ed a t r a ns it io na l m o nit o r ing a c c o u nt , pr o v is io n f o r t h e l o t t er y pr iz e. B y c r ea t ing t h e a c c o u nt , t h e B a nk a l s o h el ps t h e G o v er nm ent t o s et t l e a nd dis t r ib u t e t h e pu b l ic w el f a r e ea r ning s . T h e a m o u nt o f pr o v is io n f o r t h e l o t t er y pr iz e m a y b e neg a t iv e ( deb it ) o r po s it iv e ( c r edit ) , depending o n t h e po s s ib il it y o f w inning t h e l o t t er y . I n a c c o r da nc e w it h M O F T a i- C a i- K u N o . 0 9 8 0 0 0 5 0 29 0 , t h e B a nk h a s t h e f ina nc ia l r es po ns ib il it y f o r t h e neg a t iv e pr o v is io n f o r t h e l o t t er y pr iz e. W h en t h e per io d des ig na t ed b y t h e M O F ends a nd t h e a m o u nt o f pr o v is io n f o r t h e l o t t er y pr iz e is neg a t iv e, t h e B a nk h a s t o a b s o r b it . H o w ev er , t h e B a nk h a s a l r ea dy a do pt ed a ppr o pr ia t e r is k c o nt r o l s t r a t eg ies in o r der t o c o nt r o l t h e a f o r es a id f ina nc ia l r is k .

O n M a y 1 8 , 20 0 6 , t h e B a nk s ig ned a c o nt r a c t w it h L o t R ic h I nf o r m a t io n C o . f o r l o t t er y s o f t w a r e, h a r dw a r e a nd m a int ena nc es s er v ic es a m o u nt ing t o $ 1 , 1 5 9 , 1 8 5 ( w it h in w h ic h $ 6 3 8 , 8 8 0 w a s f o r s o f t w a r e s er v ic e) . T h e m a int ena nc e s er v ic e s u s t a ins f o r s ix y ea r s , s t a r t ing f r o m Au g u s t 20 0 8 t o J u l y 20 1 4 . O n M a y 3 1 , 20 1 3 , t h e B a nk s ig ned a r enew ed c o nt r a c t f o r l o t t er y s o f t w a r e, h a r dw a r e pu r c h a s e a nd es t a b l is h m ent a nd m a int ena nc es s er v ic es a m o u nt ing

127


12 7

t o $ 2, 3 22, 7 5 6 ( w it h in w h ic h $ 1 , 6 3 3 , 5 8 1 w a s f o r s o f t w a r e s er v ic e) . T h e m a int ena nc e s er v ic e s u s t a ins f o r t en y ea r s , s t a r t ing f r o m J a nu a r y 20 1 4 t o D ec em b er 20 23 . T h e B a nk ent r u s t ed T a iw a n L o t t er y C o . , L t d. t o o per a t e t h e pu b l ic w el f a r e l o t t er y ’ s t ic k et is s u ing , s a l es , pr o m o t io n, dr a w ing , pa y m ent o f pr iz e, a nd m a na g em ent , w it h a c o nt r a c t per io d f r o m J a nu a r y 1 , 20 0 7 , a nd ending o n J u ne 3 0 , 20 1 4 . T h e B a nk w il l dis b u r s e 1 . 5 0 % o f t h e t o t a l l o t t er y s a l es a m o u nt a s c o m m is s io n t o T a iw a n L o t t er y C o . , L t d. m o nt h l y . Addit io na l l y , if t h e a nnu a l t o t a l l o t t er y s a l es a m o u nt is o v er $ 9 0 b il l io n, t h e c o m m is s io n f o r t h e exc es s pa r t ( o v er $ 9 0 b il l io n) w il l b e eq u a l t o 1 . 8 0 % o f t h e t o t a l exc es s l o t t er y s a l es a m o u nt . T h e B a nk s ig ned a n a m ended c o nt r a c t w it h T a iw a n L o t t er y C o . , L t d. o n J u l y 9 , 20 0 8 , a nd r es c inded t h e g u a r a nt ee depo s it a m o u nt ing t o $ 5 0 0 , 0 0 0 . I n a ddit io n, t h e B a nk w il l dis b u r s e 1 . 20 % o f t h e t o t a l l o t t er y s a l es a m o u nt a s c o m m is s io n t o T a iw a n L o t t er y C o . , L t d. m o nt h l y f r o m J a nu a r y 1 , 20 0 8 . Addit io na l l y , if t h e a nnu a l t o t a l l o t t er y s a l es a m o u nt is o v er $ 9 0 b il l io n, t h e c o m m is s io n f o r t h e exc es s pa r t w il l b e eq u a l t o 1 . 5 0 % o f t h e t o t a l exc es s l o t t er y s a l es a m o u nt . O n S ept em b er 23 , 20 0 9 , t h e B a nk s ig ned a s ec o nd a m ended c o nt r a c t w it h T a iw a n L o t t er y C o . , L t d. , c o m m enc ing f r o m J a nu a r y 1 , 20 0 9 , t h e B a nk w il l dis t r ib u t e $ 7 0 0 m il l io n a s c o m m is s io n t o T a iw a n L o t t er y C o . , L t d. a nnu a l l y . Addit io na l l y , if t h e a nnu a l t o t a l l o t t er y s a l es a m o u nt is o v er $ 6 4 b il l io n, t h e c o m m is s io n f o r t h e exc es s pa r t ( o v er $ 6 4 b il l io n) w il l b e eq u a l t o 0 . 4 5 % o f t h e t o t a l exc es s l o t t er y s a l es a m o u nt . T h e B a nk ent r u s t ed T a iw a n L o t t er y C o . , L t d. t o o per a t e t h e pu b l ic w el f a r e l o t t er y ’ s t ic k et is s u ing , s a l es , pr o m o t io n, dr a w ing , pa y m ent o f pr iz e, a nd m a na g em ent , w it h a c o nt r a c t per io d f r o m N o v em b er 1 1 , 20 1 3 , a nd ending o n J u ne 3 0 , 20 24 . T h e B a nk w il l dis b u r s e 4 . 3 5 % o f t h e t o t a l l o t t er y s a l es a m o u nt a s c o m m is s io n t o T a iw a n L o t t er y C o . , L t d. . T h e B a nk a g r eed t h a t T a iw a n L o t t er y C o . , L t d. c a n r ec eiv e a r ew a r d, a m o u nt ing t o t h e c o m m is s io n r ev enu e a f t er t h e dedu c t io n o f v a l u e- a dded t a x ( V AT ) , r eb a t es a nd dir ec t c o s t s inc u r r ed f o r t h e l o t t er y b u s ines s , a nd t h e a ddit io n o f m a r g ina l b enef it s , if t h e b a l a nc e is po s it iv e. O t h er w is e, T a iw a n L o t t er y C o . , L t d. s h o u l d pa y f o r t h e dis c r epa nc y , if t h e b a l a nc e is neg a t iv e. O n M a y 1 5 , 20 1 5 , t h e r ew a r d c a l c u l a t io n w a s r ev is ed b y del et ing t h e a ddit io n o f m a r g ina l b enef it s , a nd w a s r et r o a c t iv el y a ppl ied f r o m J a nu a r y 1 , 20 1 5 . O n Apr il 1 7 , 20 0 9 , in o r der t o s h o w it s det er m ina t io n t o t h e dis po s a l o f M eg a F ina nc ia l H o l ding C o m pa ny ( M eg a F ina nc ia l ) s h a r es , t h e B a nk a u t h o r iz ed B a nk o f T a iw a n ( B O T ) a s t h e t r u s t ee t o dis po s e o f a l l M eg a F ina nc ia l s h a r es du r ing t h e c o nt r a c t u a l per io d. D u r ing t h e c o nt r a c t u a l per io d, B O T w il l r epr es ent t h e B a nk t o a t t end t h e M eg a F ina nc ia l a nnu a l s h a r eh o l der s ’ m eet ing a nd exec u t e t h e v o t ing r ig h t s , in c o m pl ia nc e w it h t h e M inis t r y o f F ina nc e’ s dir ec t io n. As o f M a y 20 , 20 1 4 , a l l M eg a F ina nc ia l s h a r es h a v e b een dis po s ed.

T o h el p P T B a nk C T B C I ndo nes ia o b t a in f ina nc ing f a c il it y , t h e B a nk h a s is s u ed L et t er s o f C o m f o r t t o f ina nc ia l ins t it u t io ns o n Apr il 7 , Au g u s t 28 a nd N o v em b er 5 , 20 1 4 , a nd F eb r u a r y 24 , 20 1 5 t o dec l a r e t h a t t h e o per a t io n o f t h e c o m pa ny is a c t iv el y s u ppo r t ed b y t h e B a nk . T h e c r edit a ppl ic a t io n a m o u nt s a r e U S $ 25 , 0 0 0 t h o u s a nd, U S $ 4 0 , 0 0 0 t h o u s a nd a nd U S $ 1 6 , 5 0 0 t h o u s a nd, a nd U S $ 20 , 0 0 0 , r es pec t iv el y . T o h el p C T B C B a nk ( P h il ippines ) C o r p. o b t a in f ina nc ing f a c il it y , t h e B a nk h a s is s u ed L et t er s o f C o m f o r t t o f ina nc ia l ins t it u t io ns o n F eb r u a r y 24 , 20 1 5 t o dec l a r e t h a t t h e o per a t io n o f t h e c o m pa ny is a c t iv el y s u ppo r t ed b y t h e B a nk . T h e c r edit a ppl ic a t io n a m o u nt is U S $ 5 , 0 0 0 t h o u s a nd.

128


12 8

T o h el p T h e T o k y o S t a r B a nk , L t d. o b t a in f ina nc ing f a c il it y , t h e B a nk h a s is s u ed L et t er s o f C o m f o r t t o f ina nc ia l ins t it u t io ns o n J u ne 26 , 20 1 5 t o dec l a r e t h a t t h e f ina nc ia l der iv a t iv es b u s ines s o f t h e c o m pa ny is a c t iv el y s u ppo r t ed b y t h e B a nk .

( B ) T h e b el o w inf o r m a t io n is s h o w n b a s ed o n t h e dis c l o s u r e r eq u ir em ent s o f E nf o r c em ent R u l es o f t h e T r u s t E nt er pr is e Ac t , Ar t ic l e 1 7 .

Bal ance Sheet of Tru s t Accou nts

Tru s t As s ets December 31,

2015 December 31,

2014

Tru s t Liabil ities December 31,

2015 December 31,

2014 C a s h $ 3 6 , 4 1 7 , 8 27 3 8 , 9 8 2, 7 22 P a y a b l es 3 3 9 , 7 29 , 1 0 5 3 28 , 3 7 7 , 4 8 3 B o nds 8 6 8 , 0 7 2 8 4 4 , 0 9 3 O t h er l ia b i l it ies 8 6 , 0 7 8 22, 3 3 7 S t o c k s 1 24 , 8 5 1 , 6 3 3 1 3 7 , 3 5 4 , 5 6 5 T r u s t c a pit a l 4 5 8 , 6 8 6 , 8 8 2 4 5 6 , 7 8 2, 0 1 4 M u t u a l f u nds 28 5 , 1 4 9 , 1 5 4 28 4 , 5 9 2, 1 0 1 M is c el l a neo u s r es er v es

a nd a c c u m u l a t ed ea r ning s

3 5 , 6 1 5 , 6 1 7 3 3 , 3 3 4 , 220

O t h er inv es t m ent s 3 , 0 6 7 , 6 21 2, 20 9 , 8 9 8 R ec eiv a b l es 1 7 , 0 9 4 1 , 228 , 6 7 5 R ea l es t a t es －net 4 4 , 5 5 0 , 5 7 5 25 , 5 9 1 , 9 4 1 S ec u r it ies in c u s t o dy 3 3 9 , 0 8 9 , 5 1 7 3 26 , 6 8 3 , 1 0 0 O t h er a s s et s 1 0 6 , 1 8 9 1 , 0 28 , 9 5 9 T o t a l t r u s t a s s et s $ 834,117,682 818,516,054 T o t a l t r u s t l ia b i l it ies 834,117,682 818,516,054

N o t e: As o f D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e B a nk ’ s O f f s h o r e B a nk ing U nit inv es t ed in

f o r eig n s ec u r it ies u nder s pec if ic pu r po s e t r u s t a c c o u nt s a m o u nt ing t o $ 3 , 3 0 2, 4 5 1 a nd $ 1 , 4 23 , 5 4 9 , r es pec t iv el y .

P rop erties Catal og of Tru s t Accou nts

Inv es tments December 31, 2015 December 31, 2014

C a s h $ 3 6 , 4 1 7 , 8 27 3 8 , 9 8 2, 7 22 B o nds 8 6 8 , 0 7 2 8 4 4 , 0 9 3 S t o c k s 1 24 , 8 5 1 , 6 3 3 1 3 7 , 3 5 4 , 5 6 5 M u t u a l f u nds 28 5 , 1 4 9 , 1 5 4 28 4 , 5 9 2, 1 0 1 O t h er inv es t m ent s 3 , 0 6 7 , 6 21 2, 20 9 , 8 9 8 S ec u r it ies in c u s t o dy 3 3 9 , 0 8 9 , 5 1 7 3 26 , 6 8 3 , 1 0 0 R ea l es t a t es －net L a nds 4 4 , 4 6 7 , 0 0 2 25 , 5 0 8 , 5 6 6 B u il ding s 8 3 , 5 7 3 8 3 , 3 7 5 S u b t o t a l 4 4 , 5 5 0 , 5 7 5 25 , 5 9 1 , 9 4 1 O t h er a s s et s P r epa id o t h er pa y m ent s 5 1 3 5 3 0

L o ng - t er m pr epa id r ent 1 0 , 5 22 5 , 5 24 P l edg e o f r ig h t s 9 5 , 1 5 4 1 , 0 22, 9 0 5

S u b t o t a l 1 0 6 , 1 8 9 1 , 0 28 , 9 5 9 T o t a l $ 834,100,588 817,287,379

129


12 9

Income Statement of Tru s t Accou nts

For the year ended December 31 2015 2014 T r u s t r ev enu es $ 6 , 4 3 0 , 5 6 7 5 , 4 4 2, 8 3 8 T r u s t expens es ( 3 0 5 , 9 8 8 ) ( 3 0 9 , 6 3 7 ) E a r ning s b ef o r e t a x 6 , 1 24 , 5 7 9 5 , 1 3 3 , 20 1 I nc o m e t a x ( 4 8 , 4 7 5 ) ( 3 5 , 5 9 6 ) N et pr o f it s $ 6,076,104 5,097,605

( C ) O per a t ing l ea s e T o t a l a m o u nt o f m inim u m f u t u r e ir r ev o c a b l e o per a t ing l ea s e pa y m ent o f w er e a s b el o w : December 31, 2015 December 31, 2014 L es s t h a n 1 y ea r $ 1 , 0 1 4 , 0 0 2 1 , 5 6 2, 1 7 6 1 y ea r t o 5 y ea r s 2, 1 3 9 , 8 6 3 2, 0 9 2, 6 3 3 M o r e t h a n 5 y ea r s 5 23 , 0 3 3 6 3 0 , 1 7 9 T o t a l $ 3,676,898 4,284,988

( D ) O t h er s

( a ) S t r u c t u r ed no t es c a s e

D u r ing S ept em b er t o D ec em b er in 20 0 5 , t h e B a nk ’ s H o ng K o ng B r a nc h , w it h a ppr o v a l o f t h e b o a r d’ s dir ec t o r s , pu r c h a s ed s t r u c t u r ed no t es ( “ o v er s ea s t r u c t u r ed no t es ” ) f r o m B a r c l a y s B a nk P L C a t pa r v a l u e U S $ 3 9 0 m il l io n. I n t h e y ea r 20 0 6 , t h e B a nk ’ s pa r ent c o m pa ny , C T B C F ina nc ia l H o l ding C o . , L t d. ( C T B C H o l ding ) , int ended t o inv es t M eg a F ina nc ia l H o l ding C o m pa ny . T o c o m pl y w it h t h e r eq u ir em ent s pec if ied in t h e B a nk ing Ac t o f T h e R epu b l ic o f C h ina , w h ic h r eq u ir es t h a t a c o m m er c ia l b a nk s h a l l no t inv es t m o r e t h a n f iv e per c ent ( 5 % ) s h a r es o f a c o m pa ny , H o ng K o ng B r a nc h s o l d t h e a b o v e o v er s ea s t r u c t u r ed no t es a t m a r k et pr ic e t o R ed F ir e, a s pec ia l pu r po s e v eh ic l e a c q u ir ed b y t h e f o r m er P r es ident o f t h e B a nk ’ s I ns t it u t io na l B a nk ing , S t ev en C . Z . C h eng . A pr o f it o f U S $ 8 , 4 4 8 t h o u s a nd inc u r r ed du e t o t h e dis po s a l . S u b s eq u ent l y , R ed F ir e f il ed a n a ppl ic a t io n o f r edem pt io n o f t h e s t r u c t u r ed no t es t o B a r c l a y s B a nk P L C a nd inc u r r ed a pr o f it a m o u nt ing t o U S $ 3 0 . 4 7 m il l io n. T h e o pening b a l a nc e o f U S $ 9 . 5 m il l io n w a s em b ez z l ed b y S t ev en C . Z . C h eng w it h m a l ic io u s int ent , w h il e t h e r es t o f t h e a m o u nt ( U S $ 20 . 9 0 m il l io n) w a s r em it t ed t o C T B C H o l ding ’ s o v er s ea s s u b - s u b s idia r y . I n c o ns ider a t io ns o f m a int a ining o per a t io ns , t h e ins t it u t io na l dir ec t o r o f C T B C H o l ding r em it t ed a n a dv a nc e pa y m ent o f U S $ 3 0 . 4 7 m il l io n t o t h e B a nk in a c c o r da nc e t o t h e r eq u es t f r o m t h e F S C . N o l o s s h a d inc u r r ed s inc e t h e r em it t ed a m o u nt o f U S $ 3 0 . 4 7 m il l io n w a s f a r g r ea t er t h a n U S $ 9 . 5 0 m il l io n, w h ic h w a s no t r em it t ed t o C T B C H o l ding ’ s o v er s ea s s u b - s u b s idia r y . O n Apr il 28 , 20 1 1 , t h e B a nk r ec eiv ed a l et t er f r o m C h u ng C h eng I nv es t m ent a nd K u a n H o C o ns t r u c t io n & D ev el o pm ent , t h e ins t it u t io na l dir ec t o r s o f t h e C T B C H o l ding , inf o r m ed t h a t a c c o r ding t o t h e Ana l y s is R epo r t o n t h e S a l e o f S t r u c t u r ed N o t es t o R ed F ir e b y C T B C B a nk ’ s H o ng K o ng B r a nc h ( t h e “ Ana l y s is R epo r t ” ) , t h e a t t a c h m ent o f t h e l et t er f r o m C T B C H o l ding w it h C h u ng H s in C h in N o . 1 0 0 224 3 5 7 0 0 0 5 , da t ed M a r c h 1 0 , 20 1 1 , t h e B a nk did no t s u s t a in l o s s f r o m t h e s a l e o f t h e s t r u c t u r ed no t es . B a s ed o n t h e a f o r es a id Ana l y s is R epo r t , t h e pr em is e o f t h e B a nk s u s t a ining da m a g es no l o ng er s t a nds f o r t h e pr io r exec u t io n o f t h e c o nt r a c t da t ed F eb r u a r y 9 , 20 0 9 b y a nd a m o ng C T B C H o l ding , C h u ng C h eng I nv es t m ent , a nd K u a n H o C o ns t r u c t io n & D ev el o pm ent . T h er ef o r e, t h e B a nk h a s b een r eq u es t ed t o neg o t ia t e w it h C h u ng C h eng I nv es t m ent a nd K u a n H o C o ns t r u c t io n & D ev el o pm ent f o r a

130


130

r ea s o na b l e r es o l u t io n. O n Au g u s t 1 6 , 20 1 1 , t h e B a nk s ent a l et t er t o C h u ng C h eng I nv es t m ent a nd K u a n H o C o ns t r u c t io n & D ev el o pm ent r eq u es t ing t h e ins t it u t io na l dir ec t o r s o f t h e B a nk ’ s pa r ent c o m pa ny , C T B C H o l ding , t o w it h dr a w t h e r ig h t o f r ec o u r s e r eg a r ding t h e a dv a nc e pa y m ent o f U S $ 3 0 . 4 7 m il l io n t o t h e B a nk . T h e ins t it u t io na l dir ec t o r s o f t h e B a nk ’ s pa r ent c o m pa ny , C T B C H o l ding , r es po nded o n Au g u s t 1 8 , 20 1 1 , a g r eeing t o t h e r eq u es t a nd w is h ing t h a t t h e B a nk s pends U S $ 20 . 9 0 m il l io n o f t h e a dv a nc e pa y m ent o n em er g enc y a s s is t a nc e a nd pu b l ic w el f a r e l o a ns a nd pa y s U S $ 9 . 5 7 m il l io n t o t h e B a nk ’ s pa r ent c o m pa ny , C T B C H o l ding , a s r ec o v er y f o r t h e inv es t m ent inc o m e w h ic h o r ig ina l l y s h o u l d h a v e b een r ec o g niz ed b y t h e B a nk ’ s pa r ent c o m pa ny , C T B C H o l ding . T h e l a t t er a m o u nt w a s c o ns ider ed t o b e t h e inv es t m ent inc o m e o f C T O ppo r t u nit y I nv es t m ent C o m pa ny , a s u b - s u b s idia r y o f C T B C H o l ding . T h e B a nk h a s no t y et f u l f il l ed t h e a f o r em ent io ned r eq u ir em ent , a nd t h e ins t it u t io na l dir ec t o r s s t il l ins is t ed t h e a m o u nt o f U S $ 20 . 9 0 m il l io n s h o u l d b e des ig na t ed a s t h e f u nd o f w el f a r e l o a ns f o r em er g enc y s a l v a g e. T h e m a t t er w il l b e pr o c eeded o nc e b o t h pa r t ies r ea c h a g r eem ent . C it ed f r o m t h e int er na l inv es t ig a t io n a nd t h e o pinio n l et t er f r o m t h e a t t o r ney des ig na t ed b y t h e B a nk ’ s pa r ent c o m pa ny , C T B C H o l ding , R ed F ir e is b el iev ed t o b e C T B C H o l ding ’ s S P V , s inc e t h e u l t im a t e pr o f it a nd l o s s a t t r ib u t io n b el o ng ed t o C T B C H o l ding . I n a ddit io n, f r o m t h e per s pec t iv e o f c a s h f l o w , J ef f r ey K o o , J r . , t h e f o r m er C h a ir m a n o f t h e B a nk , a nd t h e t h r ee inv o l v ed em pl o y ees did no t o b t a in a ny per s o na l b enef it s t h r o u g h t h e c a s e. O n M a y 3 1 , 20 1 3 , t h e j u dg m ent o f t h e s ec o nd ins t a nc e w a s del iv er ed b y T a iw a n H ig h C o u r t ( pl ea s e r ef er t o t h e L a w a nd R eg u l a t io ns r et r iev a l s y s t em o f t h e J u dic ia l Y u a n, S h a ng C h o ng - S u - Z i N o . 5 4 in 20 0 8 a nd J in S h a ng C h o ng - S u - Z i N o . 7 5 in 20 1 0 C r im ina l J u dg m ent s f o r r el ev a nt inf o r m a t io n) . Af t er a ppea l ing f o r t h ir d ins t a nc e, t h e S u pr em e C o u r t o f R epu b l ic o f C h ina h a s r ev o k ed t h e o r ig ina l v er dic t in Au g u s t 20 1 4 a nd u r g ed T a iw a n H ig h C o u r t t o r e- exa m ine it s v er dic t . I n t h is c a s e, R ed F ir e is t h e S P V o f C T B C H o l ding . T h u s , C T B C H o l ding did no t s u s t a in a ny l o s s , a nd J ef f r ey K o o , J r . , t h e f o r m er C h a ir m a n o f t h e B a nk , a nd t h e t h r ee inv o l v ed em pl o y ees did no t o b t a in a ny per s o na l b enef it s t h r o u g h t h e c a s e. F u r t h er m o r e, c it ing f r o m t h e l eg a l o pinio n is s u ed b y C T B C H o l ding ’ s o u t s ide c o u ns el , “ W it h r eg a r d t o t h e l eg a l a s pec t s , t h e c a s e a b o v e is a c r im ina l c a s e, a nd s inc e C T B C H o l ding is a c o r po r a t e ent it y , t h e em pl o y ees ’ indiv idu a l c r im ina l l ia b il it y w il l no t h a v e a ny inf l u enc e o n C T B C H o l ding . T h er ef o r e, t h er e s h o u l d b e no s ig nif ic a nt dis a dv a nt a g eo u s ef f ec t s o n t h e f ina nc ia l o r b u s ines s a f f a ir s o f C T B C H o l ding . Al t h o u g h t h e l it ig a t io n r es u l t is no t y et f ina l , t h e o u t c o m e s h o u l d no t h a v e neg a t iv e im pa c t s o n t h e f ina nc e a nd o per a t io n o f C T B C H o l ding s u b s t a nt ia l l y . G u il t y o r no t , t h e f a c t t h a t C T B C H o l ding h a s no t s u f f er ed da m a g e w o u l d no t b e c h a ng ed a s a r es u l t . ”

( b ) O t h er s

As f o r t h e r ea l es t a t e a nd no n- per f o r m ing l o a ns t r a ns a c t io ns a m o ng t h e B a nk a nd T ec t o nic s L a b o r a t o r ies C o . , L t d. a nd o t h er r el a t ed pa r t ies , s o m e em pl o y ees w er e a c c u s ed in v io l a t io ns o f B a nk ing Ac t a nd S ec u r it ies a nd E xc h a ng e Ac t f o r eng a g ing in s u c h t r a ns a c t io ns a nd no t dis c l o s ing r el a t ed- pa r t y t r a ns a c t io ns . T h e c a s e w a s t r a ns f er r ed b y pr o s ec u t o r s t o T a iw a n H ig h C o u r t , w h o dis m is s ed t h e c a s e o n M a y 3 1 , 20 1 3 a s it w a s b u ndl ed w it h S h a ng C h o ng - S u - Z i N o . 5 4 in 20 0 8 a nd J in S h a ng C h o ng - S u - Z i N o . 7 5 in 20 1 0 C r im ina l J u dg m ent s , indic a t ing a s epa r a t e inv es t ig a t io n s h o u l d b e init ia t ed. C u r r ent l y , t h e pr o s ec u t o r s h a v e r eq u es t ed t h e c a s e t o b e h ea r d s im u l t a neo u s l y w it h t h e s t r u c t u r ed no t es c a s e b y T a iw a n H ig h C o u r t . T h e c a s e is expec t ed t o h a v e no s ig nif ic a nt ef f ec t o n t h e B a nk ’ s o per a t io n a nd s h a r eh o l der s ’ eq u it y .

131


131

10. SIG NIFICANT CATASTROP H IC LOSSES: None. 11. SIG NIFICANT SUBSEQ UENT EV ENTS:

T h e B a nk h a s b een a u t h o r iz ed t o es t a b l is h X ia m en B r a nc h b y C h ina B a nk ing R eg u l a t o r y C o m m is s io n o n D ec em b er 25 , 20 1 5 . I nv es t m ent C o m m is s io n o f M inis t r y o f E c o no m ic Af f a ir s , R . O . C . h a s is s u ed J ing - S h a ng - E r - Z i N o . 1 0 5 0 0 0 1 3 1 0 0 t o g r a nt t h e inv es t ed a m o u nt o f U S $ 1 3 1 , 1 4 8 t h o u s a nd ( eq u iv a l ent t o C N Y 8 0 0 m il l io n) a s o per a t ing c a pit a l f o r t h e r eg is t r a t io n o f t h e b r a nc h . T o expa nd c o ns u m ing f ina nc ia l b u s ines s in C h ina , t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o in a w a y o f j o int v ent u r e t o s et u p a c o ns u m ing f ina nc ia l c o m pa ny w it h t h e a m o u nt o f C N Y $ 1 7 0 m il l io n in X ia m en, C h ina o n F eb r u a r y 24 , 20 1 6 . I t w il l t a k e ef f ec t a f t er t h e a ppr o v a l o f t h e b il a t er a l c o m pet ent a u t h o r it y . I n c o ns ider a t io n o f o v er a l l s t r a t eg y l a y o u t in C h ina a r ea , t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o t er m ina t e s et t ing u p c o ns u m ing f ina nc ia l c o m pa ny in H ef ei, Anh u i P r o v inc e, C h ina o n F eb r u a r y 24 , 20 1 6 . W it h t h e t a r g et s o f expa nding t h e b a s em ent o f exc el l ent c u s t o m er a nd s t r eng t h en t r a ding r el a t io ns h ip, t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o t a k e o v er a pa r t o f l o a ns f r o m AN Z B a nk ( T a iw a n) w it h t h e a m o u nt o f $ 1 . 2 b il l io n o n M a r c h 29 , 20 1 6 . T h e B a nk expec t ed t o s et t l e b y Apr il , 20 1 6 . T o expa nd b u s ines s , t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o s ig n a n inv es t m ent m em o r a ndu m w it h L H F ina nc ia l G r o u p P u b l ic C o m pa ny L im it ed ( L H F G ) t o a c q u ir e it s 7 . 5 4 5 b il l io n s h a r es in pr iv a t e pl a c em ent a m o u nt ed t o T H B $ 1 6 . 6 b il l io n ( eq u iv a l ent t o N T D $ 1 5 . 4 b il l io n) o n M a r c h 29 , 20 1 6 . B y t h e a c q u is it io n, t h e B a nk w il l h o l d 3 5 . 6 % s h a r e o f L H F G . O nc e t h e B a nk h a s s ig ned t h e inv es t m ent m em o r a ndu m , it w il l s t a r t t o pr o c es s du e dil ig enc e w o r k s , a f t er t h en, t h e c o nt r a c t w il l b e o f f ic ia l l y s ig ned. T h is t r a ns a c t io n w il l b e c o m pl et ed a s g et t ing t h e a ppr o v a l o f r el a t ed a u t h o r it ies .

12. OTH ERS

( A) P r o f it a b il it y U nit : % Items December 31, 2015 December 31, 2014 R et u r n o n a s s et s r a t io ( a nnu a l ) B ef o r e inc o m e t a x 1 . 1 8 1 . 5 8 Af t er inc o m e t a x 1 . 0 1 1 . 3 7 R et u r n o n eq u it y r a t io ( a nnu a l ) B ef o r e inc o m e t a x 1 8 . 3 9 24 . 4 4 Af t er inc o m e t a x 1 5 . 8 2 21 . 1 6 N et inc o m e r a t io 3 7 . 0 4 4 0 . 3 1 N o t e 1 : R et u r n o n a s s et s r a t io = N et inc o m e b ef o r e/ a f t er inc o m e t a x ÷ a v er a g e t o t a l a s s et s . N o t e 2: R et u r n o n eq u it y r a t io = N et inc o m e b ef o r e/ a f t er inc o m e t a x ÷ a v er a g e t o t a l

s t o c k h o l der s ’ eq u it y . N o t e 3 : N et inc o m e r a t io = N et inc o m e a f t er inc o m e t a x ÷ N et r ev enu e. N o t e 4 : N et inc o m e b ef o r e/ a f t er t a x r epr es ent ed a c c u m u l a t ed inc o m e o f c u r r ent y ea r .


131

10. SIG NIFICANT CATASTROP H IC LOSSES: None. 11. SIG NIFICANT SUBSEQ UENT EV ENTS:

T h e B a nk h a s b een a u t h o r iz ed t o es t a b l is h X ia m en B r a nc h b y C h ina B a nk ing R eg u l a t o r y C o m m is s io n o n D ec em b er 25 , 20 1 5 . I nv es t m ent C o m m is s io n o f M inis t r y o f E c o no m ic Af f a ir s , R . O . C . h a s is s u ed J ing - S h a ng - E r - Z i N o . 1 0 5 0 0 0 1 3 1 0 0 t o g r a nt t h e inv es t ed a m o u nt o f U S $ 1 3 1 , 1 4 8 t h o u s a nd ( eq u iv a l ent t o C N Y 8 0 0 m il l io n) a s o per a t ing c a pit a l f o r t h e r eg is t r a t io n o f t h e b r a nc h . T o expa nd c o ns u m ing f ina nc ia l b u s ines s in C h ina , t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o in a w a y o f j o int v ent u r e t o s et u p a c o ns u m ing f ina nc ia l c o m pa ny w it h t h e a m o u nt o f C N Y $ 1 7 0 m il l io n in X ia m en, C h ina o n F eb r u a r y 24 , 20 1 6 . I t w il l t a k e ef f ec t a f t er t h e a ppr o v a l o f t h e b il a t er a l c o m pet ent a u t h o r it y . I n c o ns ider a t io n o f o v er a l l s t r a t eg y l a y o u t in C h ina a r ea , t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o t er m ina t e s et t ing u p c o ns u m ing f ina nc ia l c o m pa ny in H ef ei, Anh u i P r o v inc e, C h ina o n F eb r u a r y 24 , 20 1 6 . W it h t h e t a r g et s o f expa nding t h e b a s em ent o f exc el l ent c u s t o m er a nd s t r eng t h en t r a ding r el a t io ns h ip, t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o t a k e o v er a pa r t o f l o a ns f r o m AN Z B a nk ( T a iw a n) w it h t h e a m o u nt o f $ 1 . 2 b il l io n o n M a r c h 29 , 20 1 6 . T h e B a nk expec t ed t o s et t l e b y Apr il , 20 1 6 . T o expa nd b u s ines s , t h e B a nk ’ s b o a r d o f dir ec t o r s a ppr o v ed t o s ig n a n inv es t m ent m em o r a ndu m w it h L H F ina nc ia l G r o u p P u b l ic C o m pa ny L im it ed ( L H F G ) t o a c q u ir e it s 7 . 5 4 5 b il l io n s h a r es in pr iv a t e pl a c em ent a m o u nt ed t o T H B $ 1 6 . 6 b il l io n ( eq u iv a l ent t o N T D $ 1 5 . 4 b il l io n) o n M a r c h 29 , 20 1 6 . B y t h e a c q u is it io n, t h e B a nk w il l h o l d 3 5 . 6 % s h a r e o f L H F G . O nc e t h e B a nk h a s s ig ned t h e inv es t m ent m em o r a ndu m , it w il l s t a r t t o pr o c es s du e dil ig enc e w o r k s , a f t er t h en, t h e c o nt r a c t w il l b e o f f ic ia l l y s ig ned. T h is t r a ns a c t io n w il l b e c o m pl et ed a s g et t ing t h e a ppr o v a l o f r el a t ed a u t h o r it ies .

12. OTH ERS

( A) P r o f it a b il it y U nit : % Items December 31, 2015 December 31, 2014 R et u r n o n a s s et s r a t io ( a nnu a l ) B ef o r e inc o m e t a x 1 . 1 8 1 . 5 8 Af t er inc o m e t a x 1 . 0 1 1 . 3 7 R et u r n o n eq u it y r a t io ( a nnu a l ) B ef o r e inc o m e t a x 1 8 . 3 9 24 . 4 4 Af t er inc o m e t a x 1 5 . 8 2 21 . 1 6 N et inc o m e r a t io 3 7 . 0 4 4 0 . 3 1 N o t e 1 : R et u r n o n a s s et s r a t io = N et inc o m e b ef o r e/ a f t er inc o m e t a x ÷ a v er a g e t o t a l a s s et s . N o t e 2: R et u r n o n eq u it y r a t io = N et inc o m e b ef o r e/ a f t er inc o m e t a x ÷ a v er a g e t o t a l

s t o c k h o l der s ’ eq u it y . N o t e 3 : N et inc o m e r a t io = N et inc o m e a f t er inc o m e t a x ÷ N et r ev enu e. N o t e 4 : N et inc o m e b ef o r e/ a f t er t a x r epr es ent ed a c c u m u l a t ed inc o m e o f c u r r ent y ea r .

132


132

( B ) T h e inc o m e a nd expens es a r is ing f r o m t h e j o int m a r k et ing o per a t io n a nd inf o r m a t io n int er o per a b il it y a m o ng s t t h e F ina nc ia l H o l ding C o m pa ny ’ s s u b s idia r ies w er e a l l o c a t ed a s f o l l o w s : T h e B a nk a nd C T B C L if e I ns u r a nc e C o . , L t d. ( “ C T B C L if e” ) h a v e g a ined f r o m t h e j o int b u s ines s pr o m o t io n. T h e b o nu s f o r c o - m a r k et ing w it h C T B C L if e is s h a r ed b a s ed o n a nnu a l c o m m is s io n r a t e a g r eed b et w een t h e B a nk a nd C T B C L if e f o r ea c h ins u r a nc e pr o du c t . T h e a f o r es a id a l l o c a t io ns o f r ev enu e a nd expens es a r e dis c l o s ed in N o t e 7 .

( C ) T h e Ac q u is it io n o f T h e T o k y o S t a r B a nk , L t d.

T h e T o k y o S t a r B a nk , L t d. o b t a ined b u s ines s l ic ens e a nd per m it o n M a y 1 4 , 20 0 1 , a nd c o m m enc ed c o m m er c ia l b a nk ing o per a t io n o n J u ne 1 1 , 20 0 1 . T h e s er v ic es T h e T o k y o S t a r B a nk , L t d. pr o v ides t o it s c u s t o m er s a r e depo s it s a nd l o a ns , deb t endo r s em ent g u a r a nt ees , do m es t ic a nd f o r eig n r em it t a nc es , m a r k et a b l e s ec u r it ies , deb t m a na g em ent a nd c o l l ec t io n, a nd o t h er b u s ines s es . O n J u ne 5 , 20 1 4 , t h e B a nk a c q u ir ed 1 0 0 % eq u it y s t a k e o f T h e T o k y o S t a r B a nk , L t d. b y c a s h , a nd s et it a s a s u b s idia r y t h a t t h e B a nk h a s 1 0 0 % o w ner s h ip. T h e B a nk s t a r t s t o r ec o g niz e t h e a c q u ir ee’ s pr o f it a nd l o s s es a f t er t h e a c q u is it io n is s et t l ed.

G a in f r o m a b a r g a in pu r c h a s e w a s r ec o g niz ed b y t h e B a nk w it h t h e m a r g in o f ident if ia b l e net a s s et s a c q u ir ed a t f a ir v a l u e a g a ins t a c q u is it io n c o s t . T h e f o l l o w ing s h o w s t h e a c q u ir ed a s s et s a nd a s s u m ed l ia b il it ies o f t h e T o k y o S t a r B a nk , L t d. o n J u ne 5 , 20 1 4 a nd t h e em er g ed a m o u nt o f g a in f r o m a b a r g a in pu r c h a s e.

( a ) Ac q u is it io n c o s t

T h e B a nk a c q u ir ed 1 0 0 % eq u it y s t a k e o f T h e T o k y o S t a r B a nk , L t d. a t $ 1 5 , 6 6 5 , 0 8 5 . ( b ) I dent if ia b l e a s s et s a c q u ir ed a nd l ia b il it ies a s s u m ed

T h e f o l l o w ing t a b l e s h o w s t h e f a ir v a l u e o f a c q u ir ed ident if ia b l e a s s et s a nd a s s u m ed l ia b il it ies o n t h e a c q u is it io n da t e a nd t h e em er g ed a m o u nt o f g a in f r o m a b a r g a in pu r c h a s e.

Ac q u is it io n c o s t $ 1 5 , 6 6 5 , 0 8 5 Ac q u ir ee’ s a s s et s 7 6 3 , 6 7 3 , 4 4 4 Ac q u ir ee’ s l ia b il it ies ( 7 3 3 , 1 9 4 , 20 5 )

F a ir v a l u e o f ident if ia b l e net a s s et s a c q u ir ed 3 0 , 4 7 9 , 23 9 P er c ent a g e a c q u ir ed 1 0 0 % 3 0 , 4 7 9 , 23 9 G a in f r o m a b a r g a in pu r c h a s e $ (14,814,154)

( c ) Af t er r ef er r ing t o J a pa nes e a c q u is it io n c a s es t a k ing pl a c es in po s t f ina nc ia l - r ec es s io n

per io d, t h e B a nk dec ided t o a ppl y r eg io na l b a nk s ’ P r ic e- B o o k R a t io t o det er m ine t h e a c q u is it io n c o s t o f T h e T o k y o S t a r B a nk , L t d. Addit io na l l y , t h e dif f er enc e b et w een t h e f a ir v a l u e o f net ident if ia b l e a s s et s a c q u ir ed a nd a c q u is it io n c o s t w a s r ec o g niz ed a s g a in f r o m a b a r g a in pu r c h a s e. T h e g a in f r o m a b a r g a in pu r c h a s e is im m edia t el y r ec o g niz ed in c u r r ent pr o f it o r l o s s in a c c o r da nc e t o t h e r eq u ir em ent o f I F R S 3 . And t h e a f o r em ent io ned f a ir v a l u e o f ident if ia b l e net a s s et s is ev a l u a t ed b a s ed o n t h e r epo r t is s u ed b y t h e s pec ia l is t s f r o m t h e ext er na l c o ns u l t ing f ir m s .

133


133

( d) I f t h e a c q u is it io n w er e t o t a k e pl a c e o n J a nu a r y 1 , 20 1 4 , t h e pr o f o r m a net r ev enu e a nd a f t er - t a x net inc o m e f o r t h e y ea r ended D ec em b er 3 1 o f t h e B a nk w o u l d b e $ 9 2, 7 0 4 , 1 4 8 a nd $ 3 4 , 9 7 7 , 21 7 , r es pec t iv el y . T h is h y po t h es is is m a de b y t h e m a na g em ent b y a s s u m ing t h a t t h e a c q u is it io n da t e f a l l s o n J a nu a r y 1 , 20 1 4 a nd t ent a t iv e f a ir v a l u e a dj u s t m ent s em er g ed o n t h e a c q u is it io n da t e a r e s im il a r .

( e) An expens e o f $ 1 3 6 , 5 6 1 a r o s e a s a r es u l t o f t h is a c q u is it io n. ( f ) I n c o m pl ia nc e w it h t h e r eq u ir em ent s o f J in- G u a n- Y in- F a - Z i N o . 1 0 3 1 0 0 0 6 3 1 0 is s u ed

o n D ec em b er 3 0 , 20 1 4 . A r es o l u t io n o f 20 1 5 ea r ning s dis t r ib u t io n f o r s t o c k h o l der s ’ m eet ing , t h e B a nk pr o v is io n f o r a r es er v e a t t h e a m o u nt t h a t is c o ns is t ent w it h t h e inc r ea s e o f r et a ined ea r ning s a t t r ib u t ed f r o m a g a in o n b a r g a in pu r c h a s e. T h e a f o r es a id r es er v e c a nno t b e r ev er s ed w it h in o ne y ea r . S u b s eq u ent t o t h e o ne- y ea r r es t r ic t io n, t h e r es er v e c a n b e u s ed t o m a k e u p l o s s es , a nd c a n a l s o b e c a pit a l iz ed if , a f t er a s s es s m ent , no u nexpec t ed s ig nif ic a nt im pa ir m ent h a s inc u r r ed a nd w it h c o ns ent g a ined f r o m a c er t if ied pu b l ic a c c o u nt a nt .

( D ) T h e Ac q u is it io n o f C T B C I ns u r a nc e B r o k er s C o . , L t d.

T h e B a nk m er g ed w it h C T B C I ns u r a nc e B r o k er s C o . , L t d. o n N o v em b er 3 0 , 20 1 5 , s inc e b o t h m er g ing ent it ies w er e w h o l l y o w ned s u b s idia r ies o f C T B C F ina nc ia l H o l ding C o . , L t d. Ac c o r ding t o I F R S Q & A “ I nt er pr et a t io n F o r I F R S 3 O n B u s ines s C o m b ina t io ns C o nt r o l l ed B y T h e S a m e C o m pa ny ” , is s u ed b y Ac c o u nt ing R es ea r c h a nd D ev el o pm ent F o u nda t io n o n J a nu a r y 8 , 20 1 3 , s inc e t h er e is no c l ea r r eq u ir em ent in b u s ines s c o m b ina t io n u nder c o nt r o l l ed b y s a m e c o m pa ny in I F R S 3 “ B u s ines s C o m b ina t io ns ” , it is s t il l s u it a b l e t o a do pt t h e o r ig ina l r el a t ed int er pr et a t io ns .

T h e m er g er b et w een t h e B a nk a nd C T B C I ns u r a nc e B r o k er s C o . , L t d. c o u l d q u a l if y a s a r eo r g a niz a t io n, in a c c o r da nc e w it h I nt er pr et a t io ns ( 1 0 1 ) N o . 3 0 1 is s u ed b y Ac c o u nt ing R es ea r c h a nd D ev el o pm ent F o u nda t io n, a nd t h u s b o t h m er g ing ent it ies ’ a s s et s a nd l ia b il it ies s h o u l d b e r ec o r ded a t t h e b o o k v a l u e o n a c o ns o l ida t ed b a s is . Addit io na l l y w h en t h e B a nk pr epa r ed c o m pa r a t iv e f ina nc ia l s t a t em ent s , t h e f ina nc ia l s t a t em ent s w er e r et r o a c t iv el y r es t a t ed t o r ef l ec t t h e m er g er a s s u m ing b o t h ent it ies h a d m er g ed o n J a nu a r y 1 , 20 1 4 . T h e B a nk a c q u ir ed a s s et s a nd l ia b il it ies o f C T B C I ns u r a nc e B r o k er s C o . , L t d. b y is s u ing 5 2, 3 5 0 t h o u s a nd c o m m o n s h a r es in a 1 0 . 4 7 - f o r - 1 exc h a ng e f o r t h e s h a r es o f C T B C I ns u r a nc e B r o k er s C o . , L t d. T h e net a s s et s o f C T B C I ns u r a nc e B r o k er s C o . , L t d. a c q u ir ed b y t h e B a nk a m o u nt ed t o $ 2, 4 3 4 , 4 7 7 .

E a c h m a j o r a s s et , w h ic h inc r ea s ed du e t o t h e m er g er o f t h e B a nk a nd C T B C I ns u r a nc e B r o k er s C o . , L t d. , is pr o v ided f o r f u t u r e o per a t io na l u s e; t h er ef o r e, t h er e a r e no pl a ns f o r a ny s ig nif ic a nt dis po s a l o f t h es e a s s et s . I n a ddit io n, t h e o per a t ing r es u l t s o f C T B C I ns u r a nc e B r o k er s C o . , L t d. f o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , h a v e b een r ec o r ded in t h e inc o m e s t a t em ent s o f t h e B a nk f o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , a nd t h e B a nk ’ s f ina nc ia l s t a t em ent s f o r t h e y ea r ended D ec em b er 3 1 , 20 1 4 , h a v e b een r et r o a c t iv el y r es t a t ed.

134


134

13. Dis cl os u re Req u ired

( A) R el a t ed inf o r m a t io n o n s ig nif ic a nt t r a ns a c t io ns ( a ) L o a ns t o o t h er s b u s ines s es o r indiv idu a l s : N o t a ppl ic a b l e t o b a nk s u b s idia r ies ; o t h er s :

N o ne. ( b ) E ndo r s em ent s a nd g u a r a nt ees f o r o t h er s : N o t a ppl ic a b l e t o b a nk s u b s idia r ies ; o t h er s :

N o ne.

( c ) M a r k et a b l e s ec u r it ies h el d a s o f D ec em b er 3 1 , 20 1 5 ( exc l u ding inv es t ed s u b s idia r ies , a s s o c ia t es a nd j o int v ent u r es ) : no t a ppl ic a b l e t o b a nk ing s u b s idia r ies ; o t h er s : N o ne.

( d) C u m u l a t iv e pu r c h a s es o r s a l es o f t h e s a m e inv es t ee’ s c a pit a l s t o c k u p t o $ 3 0 0 , 0 0 0 o r

1 0 % o f pa id- in c a pit a l : N o ne. ( e) Ac q u is it io n o f r ea l es t a t e o v er $ 3 0 0 , 0 0 0 o r 1 0 % o f pa id- in c a pit a l :

U nit ：I n T h o u s a nds o f N ew T a iw a n D o l l a r s

Acq u iring comp any

Name of p rop erty

Trans action date

Trans action amou nt

P ayment s tatu s

Cou nterp arty

Rel ation- s hip

P rev iou s trans f er data w hen cou nterp arty is rel ated p arty Ref erence

f or acq u is ition

p rice

Acq u is ition p u rp os e

and u s e s tatu s

Other additional

term

Ow nerRel ations hip

w ith is s u er Trans f er

date

Amou nt C T B C B a nk C o . , L t d.

L a nd a nd b u il ding s

J u l y 23 , 20 1 5

5 , 1 3 9 , 8 0 0 4 , 0 6 3 , 3 24 Y u ng - Y u e C o nt r u c t io n a nd D ev el o pm ent C o . , L t d. a nd L ia n- H u ng E ng ineer ing a nd D ev el o pm ent C o . , L t d.

N o n- r el a t ed pa r t y .

N / A N / A N / A - V a l u a t io n r epo r t

F o r o w ner ’ s u s e

N o t e 1 N o t e 2

N o t e 1 : Ac c o r ding t o t h e c o nt r a c t t h e B a nk h a s pa id f o r l a nd in f o u r ins t a l l m ent s a nd f o r

b u il ding in t w o ins t a l l m ent s , h o w ev er , t h e c o ns t r u c t io n h a s no t c o m pl et ed y et .

N o t e 2: B u il ding o w ner s h ip w il l b e t r a ns f er r ed t o t h e B a nk o nc e t h e b u il ding is c o m pl et ed. ( f ) D is po s a l o f r ea l es t a t e u p t o $ 3 0 0 , 0 0 0 o r 1 0 % o f pa id- in c a pit a l :

U nit I n T h o u s a nds o f N ew T a iw a n D o l l a r s / T h o u s a nds o f U S D o l l a r s Dis p os ed

comp any

Name of

p rop erty

Trans action

date Acq u ired amou nt Book v al u e

Trans action

amou nt Bal ance du e

Dis p os al gain

or l os s Cou nterp arty

Rel ation-

s hip

Dis p os al

p u rp os e P rice ref erence

Additional

terms

C T B C B a nk

C o . , L t d.

L a nd

a nd

B u il ding s

J u l y 29 ,

20 1 5

L a nd:

O c t o b er 20 , 1 9 9 8

B u il ding s : D ec em b er 3 1 , 20 0 5

3 3 4 , 0 9 1 1 , 0 6 8 , 1 6 8 N o ne 7 28 , 4 6 9 C h ia T a i L a nd

B u s ines s

C o m pa ny L im it ed

N o n- r el a t ed

pa r t y .

Ac t iv a t e

pr o per t y

V a l u a t io n

r epo r t

N o ne

C T B C B a nk

C o . , L t d.

L a nd N o v em b er 6 ,

20 1 5

N o v em b er 1 4 , 1 9 9 2 3 , 4 1 0 , 3 5 3 1 5 , 1 22, 7 0 0 T W D : 1 , 24 2, 27 0

U S D : 8 , 3 0 4

1 0 , 229 , 8 0 0 G r een H ea v en

I nv es t m ent s

L t d. a nd S h i- H e D ev el o pm ent

C o r p.

N o n- r el a t ed

pa r t y .

Ac t iv a t e

pr o per t y

V a l u a t io n

r epo r t

N o t e

N o t e: T h e f ir s t ins t a l l m ent h a s b een c o l l ec t ed a c c o r ding t o t h e c o nt r a c t . ( g ) D is c o u nt o n c o m m is s io n f ees f o r t r a ns a c t io n w it h r el a t ed pa r t ies u p t o $ 5 , 0 0 0 : N o ne.

135


135

( h ) R ec eiv a b l es f r o m r el a t ed pa r t ies u p t o $ 3 0 0 , 0 0 0 o r 1 0 % o f pa id- in c a pit a l :


Accou nt receiv abl e creditor Cou nterp arty Rel ations hip

Bal ance du e

f rom rel ated

p arty

Tu rnov er

rate

Ov erdu e f rom rel ated p arty

Amou nt Dis p os al

Su bs eq u ent col l ections

f rom rel ated p arty

P rov is ion

f or bad

debt

C T B C B a nk C o . , L t d. , N a t io na l C r edit C a r d

C ent er o f R . O . C .

T h e dir ec t o r o f t h e c o m pa ny w h ic h is

c o nt r o l l ed b y t h e s a m e pa r ent

c o m pa ny a s t h e B a nk is it s C h a ir m a n.

2, 1 9 4 , 3 0 5 - % - - F u l l y r ec o v er ed -

( i) F ina nc ia l der iv a t iv e t r a ns a c t io ns : N o t a ppl ic a b l e t o b a nk s u b s idia r ies ; o t h er s : N o ne. ( j ) I nf o r m a t io n o n N P L dis po s a l t r a ns a c t io n:

1 . S u m m a r y t a b l e o f N P L dis po s a l :

U nit I n T h o u s a nds o f J P Y D o l l a r s

Trade date Cou nterp arty Debt comp onent Book v al u e Sal e p rice G ain (l os s ) on dis p os al

Additional term

Rel ations hip

M a r c h 1 9 , 20 1 5

Au r o r a S er v ic ing , L t d.

N o n- s ec u r ed l o a n J P Y 1 , 5 3 4 , 7 5 0 J P Y 6 2, 1 0 0 J P Y ( 1 , 4 7 2, 6 5 0 ) N o ne N o n- r el a t ed pa r t y

Apr il 24 , 20 1 5

T S B S er v ic er , L t d. S ec u r ed l o a n J P Y 5 , 22 6 J P Y 2, 1 1 0 J P Y ( 3 , 1 1 6 ) N o ne R el a t ed pa r t y

J u l y 1 5 , 20 1 5

I . R s er v ic ing . L t d S ec u r ed l o a n J P Y 2 6 , 7 3 6 J P Y 3 1 , 7 1 7 J P Y ( 4 , 9 8 0 ) N o ne N o n- r el a t ed pa r t y

D ec em b er 1 5 , 20 1 5

I . R s er v ic ing . L t d N o n- s ec u r ed l o a n J P Y 4 3 3 , 0 3 6 J P Y 1 0 9 , 0 4 8 J P Y ( 3 23 , 9 8 7 ) N o ne N o n- r el a t ed pa r t y

2. D is po s a l o f a s ing l e b a t c h o f N P L u p t o $ 1 , 0 0 0 , 0 0 0 a nd inf o r m a t io n o n ea c h t r a ns a c t io n

: N o ne.

( k ) T y pes o f s ec u r it iz a t io n ins t r u m ent s a ppr o v ed t o b e is s u ed pu r s u a nt t o f ina nc ia l a s s et s s ec u r it iz a t io n r u l es o r r ea l es t a t e s ec u r it iz a t io n r u l es a nd o t h er r el ev a nt inf o r m a t io n: N o ne.

( l ) B u s ines s r el a t io ns h ip a nd m a t er ia l t r a ns a c t io n b et w een t h e pa r ent c o m pa ny a nd

s u b s idia r ies :

Trans action s tatu s f or the year ended December 31, 2015

No. (Note) P arty Cou nterp arty Rel ations hip Accou nt Amou nt Terms

P ercentage of cons ol idated net

rev enu es or cons ol idated total as s ets

0 C T B C B a nk C o . , L t d. C T B C C a pit a l C o r p. P a r ent t o s u b s idia r y

C a s h a nd c a s h eq u i v a l ent s / D epo s it s a nd r em it t a nc es

6 , 4 1 6 , 4 5 4 I dent ic a l w i t h no n- r el a t ed pa r t ies

0 . 1 8 %

〃〃 C T B C B a nk ( P h il ippines ) C o r p.

〃 D u e f r o m C ent r a l B a nk a nd c a l l l o a ns t o b a nk / D epo s it s f r o m C ent r a l B a nk a nd o t h er b a nk s

1 , 9 3 2, 4 3 9 〃 0 . 0 5 %

N o t e: S er ia l nu m b er is det er m ined a s f o l l o w s :

1 . 0 r epr es ent s pa r ent c o m pa ny . 2. S u b s idia r ies a r e nu m b er ed in a s eq u enc e o f Ar a b ic nu m er a l s f r o m 1 b a s ed

o n c o m pa ny c a t eg o r y .

136


136

( m ) O t h er s ig nif ic a nt t r a ns a c t io ns t h a t m a y h a v e s u b s t a nt ia l inf l u enc e u po n t h e dec is io ns m a de b y f ina nc ia l s t a t em ent u s er s : N o ne.

( B ) R el a t ed inf o r m a t io n o n inv es t ee c o m pa nies

U nit : I n T h o u s a nds o f N ew T a iw a n D o l l a r s / T h o u s a nds o f s h a r es

Name of inv es tee Location Maj or

op erations Ending ratio

of s hares Book v al u e of

inv es tment

Inv es tment gains / l os s es

recogniz ed in cu rrent p eriod

Ratio of s hares hel d by the Bank and its as s ociates

Remark s Shares

cu rrentl y hel d Shares to be

hel d

Total

s hares Ratio of s hares

C T B C B a nk ( P h il ippines ) C o r p.

1 6 t h t o 1 9 t h F l o o r s , F o r t L eg end T o w er s 3 1 s t S t r eet c o r ner 3 r d Av enu e B o nif a c io G l o b a l C it y , T a g u ig C it y , 1 6 3 4 P h il ippines


9 9 . 6 0 % 5 , 0 8 3 , 5 5 5 1 9 7 , 6 9 6 24 6 , 4 9 6 - 24 6 , 4 9 6 9 9 . 6 0 % T h e t r a ns a c t io n o n t h e l ef t h a s b een w r it t en o f f w h en c o m po s in g c o ns o l ida t ed f ina nc ia l r epo r t .

P T B a nk C T B C I ndo nes ia

T a m a r a C ent er , 1 5 t h - 1 7 t h F 1 . , J I J ender a l S u dir m a n K a v . 24 J a k a r t a 1 29 20 I ndo nes ia


9 9 . 0 0 % 6 , 0 9 2, 9 1 8 3 3 8 , 5 3 2 1 - 1 9 9 . 0 0 % 〃

C T B C B a nk C r o p. ( C a na da )

1 5 1 8 W es t B r o a dw a y , V a nc o u v er , B . C . , C a na da , V 6 J 1 W 8


1 0 0 . 0 0 % 1 , 0 6 0 , 23 1 4 1 , 1 8 4 2, 3 1 2 - 2, 3 1 2 1 0 0 . 0 0 % 〃

C T B C C a pit a l C o r p. 8 0 1 S . F ig u er o a S t r eet , S u it e 23 0 0 , L o s Ang el es , C A 9 0 0 1 7

I n v es t m ent b u s ines s

1 0 0 . 0 0 % 21 , 9 8 3 , 7 8 5 4 6 6 , 1 6 1 6 - 6 1 0 0 . 0 0 % 〃

G r a nd B il l s F ina nc e C o r po r a t io n

1 1 F . , N o . 5 6 0 , S ec . 4 , Z h o ng xia o E . R d. , D a ’ a n D is t . , T a ipei C it y 1 0 6 , T a iw a n ( R . O . C . )

P r o pr iet a r y t r a der s o f s h o r t - t er m b il l s a nd b o nds

21 . 1 5 % 1 , 8 6 3 , 1 8 7 1 24 , 9 7 6 1 1 4 , 3 9 9 - 1 1 4 , 3 9 9 21 . 1 5 %

G C B F ina nc e ( H K ) L im it ed

R o o m 28 1 2, 28 t h F l o o r , T w o I nt er na t io na l F ina nc e C ent r e, 8 F ina nc e S t r eet C ent r a l , H o ng K o n g

C o r po r a t e c r edit a nd inv es t m ent b u s ines s

- % - ( 3 5 , 8 1 0 ) - - - - % L iq u ida t ed in 20 1 5

C T B C B a nk C o r p. ( U S A)

8 0 1 S . F ig u er o a S t r eet , S u it e 23 0 0 , L o s Ang el es , C A 9 0 0 1 7


1 0 0 . 0 0 % 1 3 , 5 5 5 , 1 4 1 4 7 2, 5 7 0 C o m m o n s h a r es 3

P r ef er r ed s h a r es 1 0 0

-

C o m m o n s h a r es 3

P r ef er r ed s h a r e s 1 0 0

1 0 0 . 0 0 % T h e t r a ns a c t io n o n t h e l ef t h a s b een w r it t en o f f w h en c o m po s in g c o ns o l ida t ed f ina nc ia l r epo r t .

T h e T o k y o S t a r B a nk , L t d.

2- 3 - 5 Ak a s a k a , M ina t o - K u , T o k y o , 1 0 7 - 8 4 8 0 , J a pa n


1 0 0 . 0 0 % 3 3 , 8 7 3 , 8 6 5 3 , 4 9 1 , 1 5 7 7 0 0 - 7 0 0 1 0 0 . 0 0 % 〃

T S B C a pit a l , L t d.

2- 7 - 1 , N is h i- S h inj u k u , S h inj u k u , T o k y o

F ina nc ing a nd a s s u r a nc e b u s ines s

1 0 0 . 0 0 % 2, 8 4 6 , 24 8 ( 1 1 9 , 1 6 5 ) 1 , 9 3 6 - 1 , 9 3 6 1 0 0 . 0 0 % 〃

T S B S er v ic er , L t d. 2- 2- 1 7 , Ak a s a k a , M ina t o , T o k y o

D eb t m a na g em ent b u s ines s

1 0 0 . 0 0 % 4 7 8 , 0 9 2 1 9 , 26 0 - - - 1 0 0 . 0 0 % 〃

T o k y o S t a r B u s ines s F ina nc e, L t d.

2- 2- 1 7 , Ak a s a k a , M ina t o , T o k y o

F ina nc ing b u s ines s

1 0 0 . 0 0 % 7 5 , 0 4 8 20 , 6 6 9 5 - 5 1 0 0 . 0 0 % 〃

AZ - S t a r C o . , L t d 3 - 2- 7 , K u da n- m ina m i, C h iy o da k u , T o k y o

F u nd m a na g em ent b u s ines s

4 0 . 0 0 % 3 , 29 6 - - - - 4 0 . 0 0 %

AZ - S t a r no . 1 I n v es t m ent L im it ed P a r t ner s h ip

3 - 2- 7 , K u da n- m ina m i, C h iy o da k u , T o k y o

E q u it y in v es t m ent b u s ines s

4 3 . 9 8 % 3 5 3 , 9 4 2 - 3 - 3 4 3 . 9 8 %

137


137

( C ) R el a t ed inf o r m a t io n o n inv es t m ent s in M a inl a nd C h ina : ( a ) R el a t ed inf o r m a t io n o n inv es t ee c o m pa nies in M a inl a nd C h ina

U nit I n T h o u s a nds o f N ew T a iw a n D o l l a r s / T h o u s a nds o f U S D o l l a r s Inv es tment f l ow s

Name of

inv es tee

comp any in Mainl and

China

Main

bu s ines s

Total amou nt of

p aid- in cap ital

Method of inv es tment

(Note 1)

Accu mu l ated ou tf l ow of

inv es tment

f rom Taiw an as of J anu ary

1, 2015

Ou tf l ow

Inf l ow

Accu mu l ated ou tf l ow of

inv es tment

f rom Taiw an as of December

31, 2015

Inv es tment gains (l os s es )

(Note 2)

P ercentage

of ow ners hip

f or

direct or indirect

inv es tment

Inv es tment gains (l os s es )

(Note 2 (c))

Book v al u e

as of December

31, 2015

Accu mu l ated inw ard

remittance of

earnings as of December

31, 2015

C T B C B a nk C o . ,

L t d. , S h a ng h a i B r a nc h

C o m m er c ia l

b a nk ing

6 , 1 9 4 , 0 6 8

U S D 20 6 , 0 4 5

3 6 , 1 9 4 , 0 6 8

U S D 20 6 , 0 4 5

- - 6 , 1 9 4 , 0 6 8

U S D 20 6 , 0 4 5

1 8 9 , 1 4 5

U S D 5 , 9 1 3

A b r a nc h in

S h a ng h a i; no t a n

inv es t ee

1 8 9 , 1 4 5

U S D 5 , 9 1 3

7 , 3 26 , 6 4 1

U S D 221 , 5 7 6

N o ne.

C T B C B a nk C o . , L t d. , G u a ng z h o u

B r a nc h

〃 4 , 1 1 4 , 0 5 6 U S D 1 3 0 , 5 3 1

3 - 4 , 1 1 4 , 0 5 6 U S D 1 3 0 , 5 3 1

- 4 , 1 1 4 , 0 5 6 U S D 1 3 0 , 5 3 1

( 3 4 , 9 9 4 )U S D ( 1 , 0 6 9 )

A b r a nc h in G u a ng z h o u ;

no t a n

inv es t ee

( 3 4 , 9 9 4 )U S D ( 1 , 0 6 9 )

4 , 28 0 , 8 0 8U S D 1 29 , 4 6 2

〃

C T B C B a nk C o . ,

L t d. , X ia m en

B r a nc h

〃 - 3 - - - - - A b r a nc h in

X ia m en; no t

a n inv es t ee

S t il l in

pr epa r a t io n.

- 〃

N o t e 1 : T h r ee m et h o ds o f inv es t m ent a r e a s b el o w ; ident if y o ne o f t h em :

1 . I nv es t in M a inl a nd C h ina c o m pa nies dir ec t l y . 2. R e- inv es t in M a inl a nd C h ina c o m pa nies t h r o u g h a no t h er inv es t ee in a t h ir d

a r ea . ( P l ea s e ident if y t h e inv es t ee in t h e t h ir d a r ea . ) 3 . O t h er m et h o d: s et u p new o v er s ea s b r a nc h es .

N o t e 2: T h e c o l u m n o f “ I nv es t m ent g a ins ( l o s s es ) ” : 1 . I f t h e c o m pa ny is s t il l in t h e pr epa r a t io n pr o c es s , a nd do es no t h a v e a ny

inv es t m ent g a in o r l o s s , pl ea s e s pec if y . 2. T h e b a s es f o r r ec o g nit io n o f inv es t m ent inc o m e o r l o s s h a v e t h r ee m et h o ds ,

pl ea s e s pec if y .

a . T h e a u dit ed f ina nc ia l r epo r t s t h a t a r e is s u ed b y a n int er na t io na l a c c o u nt ing f ir m w h ic h is c o nnec t ed t o a n a c c o u nt ing f ir m in T a iw a n.

b . T h e a u dit ed f ina nc ia l r epo r t s t h a t a r e is s u ed b y t h e T a iw a n pa r ent

c o m pa ny ’ s des ig na t ed a c c o u nt ing f ir m .

c . O t h er s : t h e indiv idu a l pr o f it o r l o s s o f a n o v er s ea b r a nc h .

3 . P l ea s e s pec if y if inf o r m a t io n r eg a r ding c u r r ent g a ins o r l o s s es o f a n inv es t ee is no t r et r iev a b l e.

138


138

( b ) U pper l im it o n inv es t m ent in M a inl a nd C h ina :

U nit I n T h o u s a nds o f N ew T a iw a n D o l l a r s / T h o u s a nds o f U S D o l l a r s N a m e o f inv es t o r

c o m pa ny

Accu mu l ated ou tf l o w of inv es tment f rom Taiw an to Mainl and China as of

December 31, 2015 Inv es tment amou nts au thoriz ed by

Inv es tment Commis s ion, MOEA

Up p er l imit on inv es tment au thoriz ed by Inv es tment

Commis s ion, MOEA C T B C B a nk C o . , L t d. 1 0 , 3 0 8 , 1 24

U S D 3 3 6 , 5 7 6 1 1 , 24 0 , 1 5 8

U S D 3 3 9 , 9 3 1 1 4 0 , 0 4 6 , 5 5 6 U S D 4 , 23 5 , 3 6 4

14. Segment Inf ormation:

T h e B a nk a nd it s s u b s idia r ies ’ pr o v ide t h eir c h ief o per a t ing dec is io n m a k er w it h nec es s a r y inf o r m a t io n a c c o r ding t o t h e c h a r a c t er is t ic s o f t h e b u s ines s , t o f a c il it a t e t h e a s s es s m ent o f per f o r m a nc e a nd a l l o c a t io n o f o per a t io na l r es o u r c es . T h e dis c l o s u r es o f a s s et s , pr o f it s a nd l o s s es a r e t h e s a m e a s t h e s u m m a r y o f s ig nif ic a nt a c c o u nt ing po l ic ies des c r ib ed in N o t e 4 . Ac c o r ding t o I F R S 8 “ O per a t ing S eg m ent s ” , r epo r t a b l e s eg m ent s a r e a s b el o w : T h e m a j o r o per a t ing a c t iv it ies o f I ns t it u t io na l B a nk ing a r e c o m m er c ia l b a nk ing a nd c a pit a l m a r k et a c t iv it ies w h ic h pr o v ide c l ient s w it h f l exib l e a nd t a il o r - m a de f ina nc ing s er v ic es a nd t h e des ig n, s u ppl y , a nd pr o pr iet y t r a ding o f v a r io u s f ina nc ia l pr o du c t s . T h e m a j o r o per a t ing a c t iv it ies o f R et a il B a nk ing is pr o v iding t a r g et c l ient s w it h r el ev a nt f ina nc ia l s er v ic es , inc l u ding w ea l t h m a na g em ent , c r edit c a r ds , s ec u r ed l o a ns , a nd u ns ec u r ed indiv idu a l l o a ns . T h e m a j o r o per a t io ning a c t iv it ies o f J a pa n B u s ines s a r e o per a t ed b y T h e T o k y o S t a r B a nk , L t d. T h e m a j o r o per a t ing a c t iv it ies o f o t h er s eg m ent s a r e inv es t ing a nd g ener a l a dm inis t r a t io n. F o r t h e y ea r ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , t h e a b o v e o per a t ing s eg m ent s did no t m eet t h e c r it er ia f o r r epo r t a b l e s eg m ent s w h en a ppl y ing q u a nt it a t iv e t h r es h o l ds . ( A) S eg m ent inf o r m a t io n

For the year ended December

31, 2015 Ins titu tional

Bank ing Retail

Bank ing J ap an

Bu s ines s Other

s egments

Total N et int er es t inc o m e $ 1 8 , 8 4 5 , 1 26 1 3 , 7 7 3 , 5 4 9 1 0 , 23 3 , 4 5 4 221 , 6 6 7 4 3 , 0 7 3 , 7 9 6

N o n- int er es t inc o m e 1 0 , 223 , 5 5 6 24 , 3 4 3 , 1 7 1 3 , 3 7 8 , 7 8 3 1 1 , 4 3 0 , 8 1 1 4 9 , 3 7 6 , 3 21 N et inc o m e 29 , 0 6 8 , 6 8 2 3 8 , 1 1 6 , 7 20 1 3 , 6 1 2, 23 7 1 1 , 6 5 2, 4 7 8 9 2, 4 5 0 , 1 1 7

N et I nc o m e B ef o r e T a x $ 13,255,349 17,091,181 4,842,796 4,600,075 39,789,401 T o t a l a s s et s $ 1,943,698,081 671,922,595 789,476,816 114,120,226 3,519,217,718

For the year ended December

31, 2014 Ins titu tional

Bank ing Retail

Bank ing J ap an

Bu s ines s Other

s egments

Total N et int er es t inc o m e $ 1 8 , 1 0 6 , 1 0 3 1 3 , 7 0 6 , 5 9 8 6 , 1 8 2, 8 29 27 0 , 7 5 4 3 8 , 26 6 , 28 4

N o n- int er es t inc o m e 9 , 4 5 8 , 8 1 8 23 , 0 6 5 , 4 28 2, 9 3 4 , 8 6 1 1 7 , 7 4 5 , 5 23 5 3 , 20 4 , 6 3 0 N et inc o m e 27 , 5 6 4 , 9 21 3 6 , 7 7 2, 0 26 9 , 1 1 7 , 6 9 0 1 8 , 0 1 6 , 27 7 9 1 , 4 7 0 , 9 1 4

N et I nc o m e B ef o r e T a x $ 12,437,659 17,799,083 3,738,603 8,624,140 42,599,485 T o t a l a s s et s $ 1,768,785,219 580,249,674 784,251,391 104,326,258 3,237,612,542

N o t e: D u e t o t h e a c q u is it io n o f T h e T o k y o S t a r B a nk , L t d. , g a in f r o m a b a r g a in pu r c h a s e o f

$ 1 4 , 8 1 4 , 1 5 4 h a s b een inc l u ded.

139


139

( B ) G eo g r a ph ic s eg m ent inf o r m a t io n:

T h e B a nk a nd it s s u b s idia r ies pr epa r e g eo g r a ph ic s eg m ent inf o r m a t io n, w h ic h is s h o w n a s b el o w , b y t h e g eo g r a ph ic l o c a t io n o f f o r eig n o per a t io ns .

For the year ended December 31, Region 2015 2014

N et inc o m e T a iw a n $ 6 4 , 7 8 4 , 3 3 1 6 9 , 5 4 6 , 1 5 1 As ia 24 , 4 20 , 6 8 9 1 9 , 0 8 3 , 3 8 3 N o r t h Am er ic a 3 , 24 5 , 0 9 7 2, 8 4 1 , 3 8 0 T o t a l $ 92,450,117 91,470,914 N o n- c u r r ent a s s et s T a iw a n $ 8 9 , 9 9 8 , 6 1 0 7 3 , 5 0 5 , 0 21 As ia 1 2, 1 1 9 , 0 3 0 8 , 5 1 0 , 3 3 9 N o r t h Am er ic a 2, 4 7 5 , 0 8 6 2, 3 7 6 , 5 4 6 T o t a l $ 104,592,726 84,391,906

( C ) I nf o r m a t io n o n m a j o r c u s t o m er s : F o r t h e y ea r s ended D ec em b er 3 1 , 20 1 5 a nd 20 1 4 , no indiv idu a l c u s t o m er o f t h e B a nk a nd it s s u b s idia r ies a c c o u nt ed f o r 1 0 % o r m o r e o f t h e B a nk a nd it s s u b s idia r ies ’ r ev enu e in t h e s t a t em ent s o f inc o m e. T h er ef o r e, dis c l o s u r e o f inf o r m a t io n o n m a j o r c u s t o m er s is no t r eq u ir ed.

140

14 0

Appendix 2

CTBC BANK CO., LTD.

FINANCIAL REP ORTS

DECEMBER 31, 2015 AND 2014

AND

INDEP ENDENT AUDITORS’ REP ORT

Addres s : No. 166, 168, 170, 186, 188, J ingmao 2nd Rd., Nangang Dis t., Taip ei City 115, Taiw an, R.O.C.

Tel ep hone Nu mber: 886- 2- 3327- 7777

註：此處需套印KPMG的logo及相關資訊

141

Independent Auditors’ Report

The Board of Directors CTBC Bank Co., Ltd. We have audited the accompanying balance sheets of CTBC Bank Co., Ltd. as of December 31, 2015 and 2014, and related comprehensive income statements, changes in stockholders’ equity, and cash flows for the year ended December 31, 2015 and 2014. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Rules Governing Auditing and Certification of Financial Statements of Financial Institutions by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements mentioned above present fairly, in all material respects, the financial position of CTBC Bank Co., Ltd. as of December 31, 2015 and 2014, along with its financial performance and cash flow For the year ended December 31, 2015 and 2014, in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks, the Regulations Governing the Preparation of Financial Reports by Securities Firms and the Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants. As Stated in Note 12(D), CTBC Bank Co., Ltd. merged with CTBC Insurance Brokers Co., Ltd. on November 30, 2015; the accounting treatment was based on IFRS Q&A and interpretations issued by the Accounting Research and Development Foundation, the merger could quality as reorganization. In accordance with interpretation, when CTBC Bank Co., Ltd. prepared comparative financial statements, the financial statements of CTBC Bank Co., Ltd. were retroactively restated to reflect the merger assuming both entities had merged on January 1, 2014. The structured notes cases as stated in Note 9(D) are still under investigation by the judiciary, and the results remain uncertain.

Taipei, Taiwan, R.O.C. March 29, 2016

Notice to Readers The accompanying financial reports are intended only to present the financial position, financial performance and cash flows in accordance with IFRSs accepted by the Financial Supervisory Commission and not those of any other jurisdictions. The standards, procedures, and practices to audit such financial reports are those generally accepted and applied in the Republic of China. It should be noted the independent auditors’ report and the accompanying financial reports were originally prepared in Chinese. As information loss underlies the nature of language transition, when conflicts or ambiguities arise in interpretations between the two versions, the Chinese version shall prevail.

C o n en s - ctbcbank.com€¦ · I. Letter to Sharehol ders D e r h a r e o l de s , C T B C a nk...

Documents

Transcript of C o n en s - ctbcbank.com€¦ · I. Letter to Sharehol ders D e r h a r e o l de s , C T B C a nk...